What is the notes effective interest rate

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a) On January 1, 2011, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2012. The 2011 income statement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. The stock's book value was $16,000. The company's fiscal year ends on December 31.

Required:

1. What is the note's effective interest rate?

2. Reconstruct the journal entries to record the sale of the stock on January 1, 2011, and the adjusting entry to record interest revenue at the end of 2011. The company records adjusting entries only at year-end. 

Reference no: EM13994166

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