On December 31, 2020, Conchita Martinez Company signed a $1,000,000 note to Sauk City Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Conchita Martinez’s financial situation worsened. On December 31, 2022, Sauk City Bank determined that it was probable that the company would pay back only $600,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,000,000 loan.
1. Instructions: Complete the note amortization table
Date
Cash Received
Interest Revenue
Discount Amortization
Discount Balance
Carrying Value
2. Instructions: Provide the net realizable presentation of the notes receivable as it would appear on the December 31, 2022 balance sheet.
12/31/2022
Answers: 3
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On December 31, 2020, Conchita Martinez Company signed a $1,000,000 note to Sauk City Bank. The mark...
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