Calculate the interest revenue from this transaction

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Problem -

Q1. A Company received a seven-year zero-interest-bearing note on February 22, 2019, in exchange for property it sold to B Company. There was no established exchange price for this property and the note has no ready market. The prevailing rate of interest for a note of this type was 7% on February 22, 2019, 7.5% on December 31, 2019, 7.7% on February 22, 2020, and 8% on December 31, 2020. What interest rate should be used to calculate the interest revenue from this transaction for the years ended December 31, 2019 and 2020, respectively?

a. 7% and 7.7%

b. 7.5% and 8%

c. 0% and 0%

d. 7% and 7%

2. Kennison Company has cash in bank of P10,000, restricted cash in a separate account of P3,000, and a bank overdraft in an account at another bank of P1,000. Kennison should report cash of

a. P12,000

b. P9,000

c. P13,000

d. P10,000

Reference no: EM132910437

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