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For Scenario #1, Determine the carrying value of the note as of December 31, 2016. 1. On January 1, 2015, ABC rendered services to Z Corp. in exchange for a $105,000, 3 year note. The terms of the agreement require Z Corp. to make semi-annual installment payments of P&I with the first installment due immediately. An annual interest rate of 8% is imputed. Each payment is to be received on Jan 1 and July 1. ABC s year-end is Dec 31. 2. On January 1, 2015 ABC rendered services in exchange for a $20,000 cash down payment (this down payment is NOT a PVAD; it is simply made to reduce the amount being financed) and a 3 year $90,000, 6% note. Interest is to be remitted each June 30 and Dec 31. Principal will be remitted at maturity. This customer has a credit rating which requires that money be borrowed at 10%.

For Scenario #1, Determine the carrying value of the note as of December 31, 2016. 1. On January 1, 2015, ABC rendered services to Z Corp. in exchange for a $105,000, 3 year note. The terms of the agreement require Z Corp. to make semi-annual installment payments of P&I with the first installment due immediately. An annual interest rate of 8% is imputed. Each payment is to be received on Jan 1 and July 1. ABC s year-end is Dec 31. 2. On January 1, 2015 ABC rendered services in exchange for a $20,000 cash down payment (this down payment is NOT a PVAD; it is simply made to reduce the amount being financed) and a 3 year $90,000, 6% note. Interest is to be remitted each June 30 and Dec 31. Principal will be remitted at maturity. This customer has a credit rating which requires that money be borrowed at 10%.

FINANCIAL ACCOUNTING
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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For Scenario #1, Determine the carrying value of the note as of December 31, 2016. 1. On January 1, 2015, ABC rendered services to Z Corp. in exchange for a $105,000, 3 year note. The terms of the agreement require Z Corp. to make semi-annual installment payments of P&I with the first installment due immediately. An annual interest rate of 8% is imputed. Each payment is to be received on Jan 1 and July 1. ABC s year-end is Dec 31. 2. On January 1, 2015 ABC rendered services in exchange for a $20,000 cash down payment (this down payment is NOT a PVAD; it is simply made to reduce the amount being financed) and a 3 year $90,000, 6% note. Interest is to be remitted each June 30 and Dec 31. Principal will be remitted at maturity. This customer has a credit rating which requires that money be borrowed at 10%.
Transcribed Image Text:For Scenario #1, Determine the carrying value of the note as of December 31, 2016. 1. On January 1, 2015, ABC rendered services to Z Corp. in exchange for a $105,000, 3 year note. The terms of the agreement require Z Corp. to make semi-annual installment payments of P&I with the first installment due immediately. An annual interest rate of 8% is imputed. Each payment is to be received on Jan 1 and July 1. ABC s year-end is Dec 31. 2. On January 1, 2015 ABC rendered services in exchange for a $20,000 cash down payment (this down payment is NOT a PVAD; it is simply made to reduce the amount being financed) and a 3 year $90,000, 6% note. Interest is to be remitted each June 30 and Dec 31. Principal will be remitted at maturity. This customer has a credit rating which requires that money be borrowed at 10%.
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