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QUESTION
On January 1, 20X3, Gaudreau Enterprises sold goods in exchange for a $200,000, fiveyear interest-free note from the purchaser.
- On January 1, 20X3, Gaudreau Enterprises sold goods in exchange for a $200,000, fiveyear interest-free note from the purchaser. The note was repayable at $40,000 per annum, with the first payment due on December 31, 20X3. The market rate of interest for similar notes was 6% per annum. Gaudreau Enterprises only records adjusting entries at year end. What amount of interest revenue should Gaudreau Enterprises accrue at its December 31, 20X3, year end?
- On July 1, 20X3, Clear Water Corp. received a $45,000, three-year, 6% note receivable from a customer for services performed. Interest is payable annually, with the first payment due on June 30, 20X4. The market rate for similar notes is 8%. Clear Water has a December 31 fiscal year end. How much interest revenue should Clear Water recognize in the December 31, 20X3, fiscal year?
