Question: On December 31, 2010, Roth Co. issued a $10,000 face value note payable to Wake Co. in exchange for services rendered to Roth. The note,

On December 31, 2010, Roth Co. issued a $10,000 face value note payable to Wake Co. in exchange for services rendered to Roth. The note, made at usual trade terms, is due in nine months and bears interest, payable at maturity, at the annual rate of 3%. The market interest rate is 8%. The compound interest factor of $1 due in nine months at 8% is

.944. At what amount should the note payable be reported in Roth’s December 31, 2010 balance sheet?

a. $10,300

b. $10,000

c. $ 9,652

d. $ 9,440

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