11. On December 31, 2012, Flint Corporation sold for $100,000 an old machine hav

Question

11. On December 31, 2012, Flint Corporation sold for $100,000 an old machine having an
original cost of $180,000 and a book value of $80,000. The terms of the sale were as
follows:
$20,000 down payment
$40,000 payable on December 31 each of the next two years
The agreement of sale made no mention of interest; however, 9% would be a fair rate for
this type of transaction. What should be the amount of the notes receivable net of the
unamortized discount on December 31, 2012 rounded to the nearest dollar? (The present
value of an ordinary annuity of 1 at 9% for 2 years is 1.75911.)
a. $70,364
b. $90,364.
c. $80,000.
d. $140,728.

Explanation / Answer

a. $70,364

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