Question
On December 31, 2020, Whispering Company signed a $1,054,800 note to Metlock Bank. The market interest rate at that time was 11%. The stated interest
On December 31, 2020, Whispering Company signed a $1,054,800 note to Metlock Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Whisperings financial situation worsened. On December 31, 2022, Metlock Bank determined that it was probable that the company would pay back only $632,880 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,054,800 loan.
Determine the amount of cash Whispering received from the loan on December 31, 2020.
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