Notes Receivable What amount should be recorded as sales revenue in January 2019?

Assessment # 1 Initial Payment on January 1, 2019 600,000

STABILO Company has an 8% note Receivable dated April 30,2018, in the original amount of 1,500,000. Payments PV of remaining six payments
of P500,000 in principal plus secured interest are due annually on May 1,2019,2020 and 2021 ( 600,000 x 4.36) 2,616,000
Correct sales Revenue 3, 216,000
1. What is the balance of the note receivable on May 1,2019?
N/R April 30,2018 1,500,000 N/R (600,000 x6) 3,600,000
Payment on May 1 ,2019 (500,000) Less: PV of remaining six payments (2,616,000)
N/R, May 1,2017 1,000,000 Unearned interest income 984,000
2. In April 30,2020 statement of financial position, what amount should be reported as a current asset for
interest on the note receivable? The Sales revenue is equal to the PV of the seven annual payments of 600,000 why because the noote is long term
Accrued Interest Receivable – April 30,2020(1M X 8%) 80,000 and non-interest bearing

Cash 600
Assessment # 2 N/R 3,600
On December 31,2018, Romoss Company received two P1,000,000 N/R from customers in exchange for Sales 3,216
services rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of Unearned Interest income 984
3% and payable at maturity.
The note from Firefly company , made under customary trade terms, is due in nine months and the note
from King Company is due in five years
The market interest rate for similar notes on December 31,2018 was 8%. The compound interest factors
to convert future value into present value at 8% follow:
PV of 1 due in 9 months .944
PV of 1 due in five years .680

1. What is the total carrying amount of notes receivable on December 31,2018?

Principal 1000,000
Interest for 5 years (1M x3%x5) 150,000
Maturity value 1,150,000
X PV factor .680
PV of Note 782,000

Assessment # 3
On January 1,2019 , Cherry Company sold goods to Pin Company. Pin signed a noninterest
-bearing note requiring payment of 600,000 annually for 7 years. The 1st payment was made on January 1, 2019.
Prevailing rate of Interest for this type of note at date of issuance was 10%.

Period PV of 1 at 10% PV of Ordinary Annuity of 1 at 10%

6 .56 4.36
7 .51 4.87