On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At that time, the market rate of interest was 10%. The face amount of the note and the entire amount of interest are due on the date of maturity. Interest receivable on December 31 of the current year is a. 5% of the face amount of the note’ b. 4% of the face amount of the note c. 5% of the present value of the note d. 4% of the present value of the note
On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At that time, the market rate of interest was 10%. The face amount of the note and the entire amount of interest are due on the date of maturity. Interest receivable on December 31 of the current year is a. 5% of the face amount of the note’ b. 4% of the face amount of the note c. 5% of the present value of the note d. 4% of the present value of the note
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At that time, the market rate of interest was 10%. The face amount of the note and the entire amount of interest are due on the date of maturity. Interest receivable on December 31 of the current year is
a. 5% of the face amount of the note’
b. 4% of the face amount of the note
c. 5% of the present value of the note
d. 4% of the present value of the note
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