21 Company A lends $50,000 to Company B and receives a $50,000, four-year note with a 6% stated annual interest rate. The annual cash interest payments are $50,000 x 0.6 = $3,000. The market rate for similar quality notes is 6%.Assuming an annual interest rate of 6% is appropriate, the present value of the principal of the note is $50,000 x 0.7921 = $39,605, and the present value of the cash interest payments is ($3,000 x 3.4651) = $10,395What is the carrying amount of this note when issued?$50,000$10,395O $39,605O $53,000

Carrying Amount = Present Value of the Principal + Present Value of Interest Payments Carrying…

Answered: 21 Company A lends $50,000 to Company B…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 27E

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27 On January 1, Year 1, Company A issued a non-interest-bearing note with a $40,000 face value to Company B in exchange for $40,000 in cash. The note is due in five years, and Company A has agreed to give Company B price discounts during the five-year period. The present value of the note at the implied rate of 5% is $31,341. How much Unearned Sales Revenue is recorded with the issuance of the note? $2,000 $8,659 $31,341 $40,000
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