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What amount of interest revenue included in income statement

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Problem - On December 31, 2019, Biltmore Co. provided catering services in exchange for a $100,000 zero-interest-bearing note due on December 31, 2022. The prevailing market rate of interest for a note of this type on December 31, 2019 was 10%. The present value of $1 at 10% for two periods is 0.82645 and the present value of an ordinary annuity of $1 at 10% for two periods is 1.73554. The present value of $1 at 10% for three periods is 0.75132 and the present value of an ordinary annuity of $1 at 10% for three periods is 2.48685.

Required -

1. Prepare the necessary journal entries on December 31, 2019.

2. What amount of interest revenue (rounded to the nearest dollar) should be included in Biltmore's 2020 income statement.

3. At what amount should Notes Receivable be reported on Biltmore Co.'s December 31, 2020 balance sheet?

Reference no: EM132859866

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