**Cypress Oil Company's Notes Receivable Analysis**As of December 31, 2021, Cypress Oil Company's balance sheet included $735,000 in notes receivable and $21,600 of interest receivable, classified as current assets. Below is a detailed breakdown of the notes making up this balance:**Notes Receivable Details:**1. **Note 1** - **Date:** 8/31/2021 - **Principal:** $340,000 - **Interest Rate:** 12% - **Due Date:** 2/28/2022 2. **Note 2** - **Date:** 6/30/2021 - **Principal:** $200,000 - **Interest Due Date:** 3/31/2022 3. **Note 3** - **Face Value:** $200,000 - **Type:** Noninterest-bearing - **Date:** 9/30/2021 - **Due Date:** 3/31/2022 - Note was issued as exchange for merchandise.The company's policy is to record adjusting entries only at year-end, with no additional notes receivable outstanding in 2021.**Required Analysis:**1. **Calculate the Discount Rate** used for the noninterest-bearing note.2. **Determine the Explicit Interest Rate** on Note 2.3. **Identify the Interest Revenue** recorded in the 2021 income statement related to these notes.**Analysis Summary Table:**| No. | Item | Value ||-----|--------------------|-------|| 1. | Discount rate | %|| 2. | Interest rate | %|| 3. | Interest revenue | $ |*Please note that calculations for interest should be rounded to the nearest whole dollar.*

Interest amount: Interest amount is charged on the principal amount. Interest is charged on the…

Cypress Oil Company's December 31, 2021, balance sheet listed $735,000 of notes receivable and $21,600 of interest receivable included in current assets. The following notes make up the notes receivable balance: Note 1 Dated 8/31/2021, principal of $340,000 and interest at 12% due on 2/28/2022. Note 2 Dated 6/30/2021, principal of $200,000 and interest due 3/31/2022. Note 3 $200,000 face value noninterest-bearing note dated 9/30/2021, due 3/31/2022. Note was issued in exchange for merchandise. The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2021. Required: 1. Determine the rate used to discount the noninterest-bearing note. 2. Determine the explicit interest rate on Note 2. (Round your intermediate calculations to the nearest whole dollar amount.) 3. What is the amount of interest revenue that appears in the company's 2021 income statement related to these notes?

Cypress Oil Company's December 31, 2021, balance sheet listed $735,000 of notes receivable and $21,600 of interest receivable included in current assets. The following notes make up the notes receivable balance: Note 1 Dated 8/31/2021, principal of $340,000 and interest at 12% due on 2/28/2022. Note 2 Dated 6/30/2021, principal of $200,000 and interest due 3/31/2022. Note 3 $200,000 face value noninterest-bearing note dated 9/30/2021, due 3/31/2022. Note was issued in exchange for merchandise. The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2021. Required: 1. Determine the rate used to discount the noninterest-bearing note. 2. Determine the explicit interest rate on Note 2. (Round your intermediate calculations to the nearest whole dollar amount.) 3. What is the amount of interest revenue that appears in the company's 2021 income statement related to these notes?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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