Answer:
Blanton Plastic:
cash 23,000,000
interest expense 446,540.46
note payable 23,446,540.46
note payable 23,446,540.46
cash 23,446,540.46
L&T Bank:
note receivable 23,446,540.46
cash 23,000,000
unearned revenue 446,540.46
cash 23,446,540.46
unearned revenue 446,540.46
note receivable 23,446,540.46
interest revenue 446,540.46
effective rate: 6%
Explanation:
The note was adjusted to include the interest so it charge interest to the 23,000,000
[tex]\frac{Nominal}{(1 + rate)^{time} } = PV[/tex]
Nominal N
time 4 months are 1/3 of a year
rate 6% annual = 0.06
PV 23,000,000
[tex]\frac{N}{(1 + 0.06)^{1/3} } = 23,000,000[/tex]
[tex]N = 23,000,000 \times (1 + 0.06)^{1/3}[/tex]
N = 23,446,540.46
This will be the amount signed on the note, but the company just receive 23,000,000
Effective rate:
will be the same as the loan 6%
As the amount paid was equivalent to the 23,000,000 received capitalize at 6%
