Question:
The Field Detergent Company sold merchandise to the Abel Company on June 30, 2013. Payment was
made in the form of a noninterest-bearing note requiring Abel to pay $85,000 on June 30, 2015. Assume
that a 10% interest rate properly reflects the time value of money in this situation.
Required:
Calculate the amount at which Field should record the note receivable and corresponding sales revenue on
June 30, 2013.
Answer:
PV = $85,000 (.82645) = $70,248 = Note/revenue
Present value of $1: n = 2, i = 10% (from Table 2)
The Field Detergent Company sold merchandise to the Abel Company on June 30, 2013. Payment was
made in the form of a noninterest-bearing note requiring Abel to pay $85,000 on June 30, 2015. Assume
that a 10% interest rate properly reflects the time value of money in this situation.
Required:
Calculate the amount at which Field should record the note receivable and corresponding sales revenue on
June 30, 2013.
Answer:
PV = $85,000 (.82645) = $70,248 = Note/revenue
Present value of $1: n = 2, i = 10% (from Table 2)
