Question

On December 31, 2020, Swifty Corporation sold for $152000 an old machine having an original cost of $265000 and a book value of $113000. The terms of the sale were as follows: $39000 down payment $56500 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 8% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2020 rounded to the nearest dollar

Answer 1

Answer:

the amount of the note receivable net of the unamortized discount is $100,754

Explanation:

The computation of the amount of the note receivable net of the unamortized discount is shown below:

= $56,500 × present value of an ordinary annuity for 2 years at 8%

= $56,500 ×  1.783265

= $100,754

hence, the amount of the note receivable net of the unamortized discount is $100,754