On December 31, 2008, Sea Containers Ltd., a company located in Hamilton, Bermuda, reported notes receivable of

Question:

On December 31, 2008, Sea Containers Ltd., a company located in Hamilton, Bermuda, reported notes receivable of $63,930,000. This amount represents the present value of future cash flows (both principal and interest) discounted at a rate of 11.12% per annum. The schedule of collections of the receivables is provided next:

Assume that the interest due is paid along with the face value of the receivables at the end of each year.

Required:
Provide journal entries to record the interest received and the notes receivable collected in eachyear.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...