On December 31,2020, Sheridan Company signed a $1,228,500 note to Skysong Bank. The market interest rate at that time was 10%. The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Sheridan's financial situation worsened. On December 31, 2022, Skysong Bank determined that it was probable that the company would pay back only $737,100 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,228,500 loan. (a) Determine the amount of cash Sheridan received from the loan on December 31, 2020. (Round present value factors to 5 decimal places, eg. 0.52513 and final answer to O decimal places, eg. 5,275.)

On December 31,2020, Sheridan Company signed a $1,228,500 note to Skysong Bank. The market interest rate at that time was 10%. The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Sheridan's financial situation worsened. On December 31, 2022, Skysong Bank determined that it was probable that the company would pay back only $737,100 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,228,500 loan. (a) Determine the amount of cash Sheridan received from the loan on December 31, 2020. (Round present value factors to 5 decimal places, eg. 0.52513 and final answer to O decimal places, eg. 5,275.)

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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Question

On December 31, 2020, Sheridan Company signed a $1,228,500 note to Skysong Bank. The market interest rate at that time
was 10%. The stated interest rate on the note was 8%, payable annually. The note matures in 5 years. Unfortunately, because of
lower sales, Sheridan's financial situation worsened. On December 31, 2022, Skysong Bank determined that it was probable that
the company would pay back only $737,100 of the principal at maturity. However, it was considered likely that interest would
continue to be paid, based on the $1,228,500 loan.
(a)
Determine the amount of cash Sheridan received from the loan on December 31, 2020. (Round present value factors to 5 decimal
places, eg. 0.52513 and final answer to O decimal places, eg. 5,275.)

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