Chapter 1 Problem 6-25
Problem 6-25
Face value of note 400,000 Present value 284,720
Present value (400,000 x .7118) 284,720 Cash received 125,000
Unearned interest income 115,280 Sales price 409,720
Book value 350,000
Gain on sale 59,720
2008
Jan. 1 Cash 125,000
Notes receivable 400,000
Accumulated depreciation 150,000
Equipment 500,000
Gain on sale of equipment 59,720
Unearned interest income 115,280
Dec. 31 Unearned interest income 34,166
Interest income 34,166
Date Interest income Unearned interest Present value
Jan. 01, 2008 115,280 284,720
Dec. 31, 2008 34,166 81,114 318,886
Dec. 31, 2009 38,266 42,848 357,152
Dec. 31, 2010 42,848 - 400,000
2009
Dec. 31 Unearned interest income 38,266
Interest income 38,266
2010
Dec. 31 Unearned interest income 42,848
Interest income 42,848
2011
Jan. 1 Cash 400,000
Notes receivable 400,000
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