On January 1, 20X1, a company financed the sale of equipment and recorded a note receivable for
Fantastic news! We've Found the answer you've been seeking!
Question:
On January 1, 20X1, a company financed the sale of equipment and recorded a note receivable for the sale. The accountant inappropriately recorded the sale at the face value and coupon rate in the below income statement.
Notes receivable (Face value) | 430,000 |
Tax rate | 30% |
Note receivable information:
Term of the note | 8 years |
Coupon rate | 1.2% |
Market rate | 5.6% |
The note is due in equal annual payments of principle and interest.
Incorrect income statement, for the year ended December 31, 20X1
Sales | $1,832,200 |
Interest revenue | 5,160 |
Cost of goods sold | 826,300 |
Expenses | 657,800 |
Pretax income | 353,260 |
Tax expense | 105,978 |
Net income | $247,282 |
What is the fair value of the note receivable?
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date: