On January 1, 2010, a creditor has a $200, 000 note receivable with an impaired value of $178, 571.43.The contract interest rate is 12%, and the current market rate is 10%.The principal is due on December 31, 2013.Interest payments will only be made on December 31 of 2011, 2012, and 2013.
Required:
a. Prepare the journal entry to record the 2010 interest revenue.
b. Prepare the journal entry to record the 2011 interest revenue and cash received.
c. Prepare the joumal entry to record the 2012 interest revenue and cash received.
d. Prepare the journal entry to record receipt of the final interest and principal.

Question

On January 1, 2010, a creditor has a $200, 000 note receivable with an impaired value of $178, 571.43.The contract interest rate is 12%, and the current market rate is 10%.The principal is due on December 31, 2013.Interest payments will only be made on December 31 of 2011, 2012, and 2013.
Required:
 a. Prepare the journal entry to record the 2010 interest revenue.
b. Prepare the journal entry to record the 2011 interest revenue and cash received.
c. Prepare the joumal entry to record the 2012 interest revenue and cash received.
d. Prepare the journal entry to record receipt of the final interest and principal.

Quizplus · Accepted Answer

The Answer of On January 1, 2010, a creditor has a $200, 000 note receivable with an impaired value of $178, 571.43.The contract interest rate is 12%, and the current market rate is 10%.The principal is due on December 31, 2013.Interest payments will only be made on December 31 of 2011, 2012, and 2013.
Required:
 a. Prepare the journal entry to record the 2010 interest revenue.
b. Prepare the journal entry to record the 2011 interest revenue and cash received.
c. Prepare the joumal entry to record the 2012 interest revenue and cash received.
d. Prepare the journal entry to record receipt of the final interest and principal.

On January 1, 2010, a Creditor Has a $200, 000