Q1 On December 31, 2020, Green Company finished consultation services and accepted in exchange a

promissory note with a face value of $10,000, a due date of December 31, 2020(after two years), and a
stated rate of 7%, with interest receivable on semi-annual basis; July 1, and January 1, each year. The
fair value of the services is not readily determinable and the note is not readily marketable. Under the
circumstances, the note is considered to have an appropriate imputed rate of interest of 4%.
Instruction:
1. The Present value of the note on 31/12/2020. (Use present value factors with decimals not less
than 6 digits), is………………………
2. The entry at 31/12/2020
3. Interest receivable recorded on December 31, 2021 is…………….
4. The entry to record the received of the first payment is……………
5. The adjusting entry at the end of 2022.
6. The adjusting entry at the end of 2023.
7. The carrying value at 1/1/ 2022 is……………………
8. The carrying value at 1/7/2021 is………………………….
9. The interest revenue at 1/1/2022 is………………
10. The carrying value at 1/7/2022 is……………………..
Q2 On December 31, 2020, Khalid Company finished consultation services and accepted in exchange a
promissory note with a face value of $10,000, a stated rate???%, interest is receivable on semi-annual
basis; June 30, and december31, each year. The cash interest is $250 on each of december31, 2021 and
June 30, 2022.the interest revenue is $178.804, and$177.558 for the same date respectively. Moreover,
interest revenue earned for the year 2022 is $354.
Accordingly, the note is considered to have an appropriate market rate of interest of…………………….?
Q3 the total amount of $15,000 invested for 3 years, at 6% (annually), on quarterly basis, will
be……………?
 ‫اإلجابة النموذجية‬
Q1:
year cash received interest amortized carrying value
31/12/2020 $10,571.16
1/7/2021 $ 350.00 $ 211.42 $ 138.58 $10,432.58
1/1/2022 $ 350.00 $ 208.65 $ 141.35 $10,291.23
1/7/2022 $ 350.00 $ 205.82 $ 144.18 $10,147.06
1/1/2023 $ 350.00 $ 202.94 $ 147.06 $10,000.00
1. 10571.16
2. Dr. note receivable 10571.16 CR. Service revenue 10,571.16
3. 208.65
4. Dr. cash 350 CR. Note receivable 138.58 and interest receivable 211.42
5. Dr. interest receivable 202.94 CR. Interest revenue 202.94
6. No entry
7. 10,000
8. 10,432.58
9. 208.65
10. 10,147.06
Q2: ‫معطيات السؤال اكتبها بالجدول‬
carrying
year cash received interest amortized value
31/12/2020 $
30/6/2021 $250.00 ---------- $ $ 10217.196
31/12/2021 $250.00 $178.804 $ 71.196 $ 10,146
30/6/2022 $250.00 $177.558 $ 72.442 $10,073.558
31/12/2022 $250.00 $176.442 $ 73.558 $10,000

Cash = face value * S.R

250 = 10,000 * S.R
SO S.R = 2.5%
‫ تساوي‬2022/12/31 ‫ معناها فائدة‬177.558 ‫ كانت الفائدة‬6 ‫ اذا بشهر‬354 ‫ كل الفائدة كانت‬2022 ‫اول نقطة حكالي انه بسنة‬
176.442 = 177.558 – 354
amortized ‫ثاني خطوة بتعملها بتحسب‬
‫بعدين برجع رجوع بالجدول ووقف عند أي عمود واحسب الفائدة السوقية كامل‬
Interest= carrying value * M.R
176.442 = 10073.558 * M.R )10073.558( ‫اقسم الطرفين على‬
M.R = 2 ‫ بما انها نصف سنوي اضرب ب‬0.0175
%3.5 = 2 * %1.75 ‫بالتالي الفائدة السوقية‬
Q3
15000 * (1+1.5%)^12 = 15000 * 1.195618 = 17,934.27