Business
Business, 20.06.2020 22:57, ayoismeisjjjjuan

On January 1, 2020, Sparky Inc. performed services for a customer in exchange for a $400,000, ten-year, 5% note. The note requires the customer to pay interest each December 31st, and principal will be remitted at maturity. The company uses the effective interest method to amortize any discounts or premiums. The customer’s normal cost to borrow is 8%. a. What amount of Service Revenue should Sparky record on January 1, 2020? b. What is the total amount of Interest Revenue to be earned over the entire 10-year term of the note? The PV of $1 for 5%, 10n is 0.61, the PV of $1 for 8%, 10n is 0.46. The PVOA for 5%, 10n is 7.72, and the PVOA for 8%, 10n is 6.71.

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On January 1, 2020, Sparky Inc. performed services for a customer in exchange for a $400,000, ten-ye...

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