Exhibit 13-03
On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows:
-Refer to Exhibit 13-03. What amount would Train show as the balance for Discount on Notes Receivable on December 31, 2018?

Question

Exhibit 13-03
On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows: 
-Refer to Exhibit 13-03. What amount would Train show as the balance for Discount on Notes Receivable on December 31, 2018?

Quizplus · Accepted Answer

The correct amount for the Discount on Notes Receivable on December 31, 2018, is $7,928. This is calculated by subtracting the interest revenue recognized from the total discount on the notes receivable.

Exhibit 13-03 On January 1, 2017, Train, Inc. Accepted an $80,000, Non-Interest