Cypress Oil Company’s December 31, 2016, balance sheet listed $664,000 of notes receivable and $18,0
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Cypress Oil Company’s December 31, 2016, balance sheet listed $664,000 of notes receivable and $18,000 of interest receivable included in current assets. The following notes make up the notes receivable balance:Note 1Dated 8/31/2016, principal of $310,000 and interest at 12% due on 2/28/2017.Note 2Dated 6/30/2016, principal of $160,000 and interest due 3/31/2017.Note 3$200,000 face value noninterest-bearing note dated 9/30/2016, due 3/31/2017. Note was issued in exchange for merchandise. The company records adjusting entries only at year-end. There were no other notes receivable outstanding during 2016.Required:1.Determine the rate used to discount the noninterest-bearing note. 2.Determine the explicit interest rate on Note 2. 3.What is the amount of interest revenue that appears in the company’s 2016 income statement related to these notes?
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