Pina Colada Corp. had the following long-term receivable accountbalances at December 31, 2016.
| Notes receivable - Sale of division | | $1,809,000 |
| Notes receivable - Employees | | 399,000 |
Transactions during 2017 and other information relating toPina's long-term receivables were as follows:
| 1. | | The $1,809,000 note receivable isdated May 1, 2016, bears interest at 8%, and represents the balanceof the consideration received from the sale of Pina's electronicsdivision to Blossom Company. Principal payments of $603,000 plusappropriate interest are due on May 1, 2017, 2018, and 2019. Thefirst principal and interest payment was made on May 1, 2017.Collection of the note instalments is reasonably assured. |
| 2. | | The $399,000 note receivable isdated December 31, 2016, bears interest at 7%, and is due onDecember 31, 2019. The note is due from Marcia Cumby, president ofPina Colada Corp., and is secured by 11,600 Pina's common shares.Interest is payable annually on December 31, and the interestpayment was made on December 31, 2017. The quoted market price ofPina's common shares was $40 per share on December 31, 2017. |
| 3. | | On April 1, 2017, Pina's sold apatent to Sunland Company in exchange for a $201,000non–interest-bearing note due on April 1, 2019. There was noestablished exchange price for the patent, and the note had noready market. The prevailing rate of interest for a note of thistype at April 1, 2017, was 12%. The present value of $1 for twoperiods at 12% is 0.79719 (use this factor). The patent had acarrying amount of $41,300 at January 1, 2017, and the amortizationfor the year ended December 31, 2017 would have been $7,300. Thecollection of the note receivable from Sunland is reasonablyassured. |
| 4. | | On July 1, 2017, Pina's sold aparcel of land to Kingbird Inc. for $201,500 under an instalmentsale contract. Kingbird made a $52,500 cash down payment on July 1,2017, and signed a four-year, 12% note for the $149,000 balance.The equal annual payments of principal and interest on the notewill be $49,056, payable on July 1, 2018, through July 1, 2021. Theland could have been sold at an established cash price of $200,000.The cost of the land to Pina's was $141,000. Collection of theinstalments on the note is reasonably assured. |
| 5. | | On August 1, 2017, Pina's agreed toallow its customer, Saini Inc., to substitute a six-month note foraccounts receivable of $200,000 it owed. The note bears interest at6% and principal and interest are due on the maturity date of thenote. |
Determine the amount of interest income that should be reportedin 2017. (Do not round intermediate calculations. Roundanswers to 0 decimal places, e.g. 8,971.)
Determine the portion of the note and any interest that shouldbe reported in current assets at December 31, 2017.
Determine the portion of the note that should be reported as along-term investment at December 31, 2017.
Prepare a schedule showing the current portion of the long-termreceivables and accrued interest receivable that would appear inPina's statement of financial position at December 31, 2017.
Determine the total interest income from the long-termreceivables that would appear on Pina's income statement for theyear ended December 31, 2017.
Total interest income for year ended 12/31/17
