Text: Blanks need to be filled in. PV tables need to be used. Use 5-digit PV table.
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (9) QUESTIONS
On January 2, 2014, Sparky Company performed consultation services for Wildcat Corporation and agreed to allow Wildcat to pay over time. Sparky is considering several different note options below. Wildcat's normal borrowing rate is 8%. For each option listed below, determine Service Revenue Sparky can record at Jan. 2, 2014, Interest Revenue to be recorded at December 31, 2015, and the Carrying Value of the Note Receivable on their Balance Sheet at December 31, 2015 (after interest has been accrued). Use the PV tables in your CH 6 class notes. Do not round any answer until your final answer. Round your final answer to the nearest whole dollar. When entering your final answer, do not use commas or $ sign. (Sorry...blackboard is very sensitive and will mark your answer incorrect due to rounding and punctuation.)
Service Revenue Interest Revenue Carrying Value at at at
Scenarios: 1/2/2014 12/31/2015 12/31/2015
(1) Sparky will require Wildcat to make an initial cash down payment of $30,000 on Jan. 2, 2014 (this is NOT a PVAD...simply a cash down payment so that Wildcat will not finance 100% of the services.) $Blank1 $Blank2 $Blank3
The remainder will be financed in the form of a $250,000, 5% note due December 31, 2017. Interest will be remitted each June 30 & Dec. 31, with principal due at maturity.
(2) Sparky will provide the service in exchange for a non-interest-bearing note with a face value of $285,000. Terms of the note require Principal & Interest (P&I) payments be made each June 30 & $Blank4 $Blank5 $Blank6 Dec 31 for the next 4 years.
(3) Sparky will provide the service in exchange for a four-year, $252,140, 8% note with P&I payments $Blank7 $Blank8 $Blank9 made each Jun 30 & Dec 31. The first payment will be received on Jun 30th.