For a Note Receivable with a Face Rate of Zero

question 57

Multiple Choice

For a note receivable with a face rate of zero, an implicit rate of 8%, a term of 3 years, a present value of $14,000 and a face value of $17,636, the interest to record at the end of the first year is equal to

• A)$112.
• B)zero.
• C)$1,120.
• D)$1,411.

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Definitions:

Receipt of Cash

The act of receiving cash during transactions, indicating an influx of funds.

Unearned Revenue

Money received by a company for goods or services yet to be delivered or performed, representing a liability until the obligation is fulfilled.

Quarterly Journals

Quarterly journals are publications that come out four times a year, offering articles, research, and updates on specific field of interests.

Advance Subscription Sales

Revenue received from customers for subscriptions that have been paid for in advance but the services have not yet been delivered.