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On January 1, 2018, the Apex Company exchanged some shares of common stock it had been holding as aninvestment for a note receivable. The note principal plus interest is due on January 1, 2019. The 2018 incomestatement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. Thestock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2018, and the adjusting entry torecord interest revenue at the end of 2018. The company records adjusting entries only at year-end

On January 1, 2018, the Apex Company exchanged some shares of common stock it had been holding as aninvestment for a note receivable. The note principal plus interest is due on January 1, 2019. The 2018 incomestatement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. Thestock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2018, and the adjusting entry torecord interest revenue at the end of 2018. The company records adjusting entries only at year-end

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...
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On January 1, 2018, the Apex Company exchanged some shares of common stock it had been holding as an
investment for a note receivable. The note principal plus interest is due on January 1, 2019. The 2018 income
statement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. The
stock’s book value was $16,000. The company’s fiscal year ends on December 31.
Required:
1. What is the note’s effective interest rate?
2. Reconstruct the journal entries to record the sale of the stock on January 1, 2018, and the adjusting entry to
record interest revenue at the end of 2018. The company records adjusting entries only at year-end

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