Can you add formulas to help students understand? How was the Notes receivable achieved? Interest income? I am using different numbers and want to be able to understand.

A note receivable is a written promise made by a customer (debtor) to pay a specific amount to the business (creditor) at a specified future date, with interest. The formula to calculate the face value of a note receivable is:

Face Value = Principal + Interest

Let's say a customer owes your business $10,000 (Principal) and agrees to pay an annual interest rate of 5% on the outstanding balance. If the note is due in 1 year, the face value would be:

Face Value = Principal + Interest

Face Value = $10,000 + ($10,000 * 0.05)

Face Value = $10,000 + $500

Face Value = $10,500

So, the face value of the note receivable is $10,500.

2. Interest Income:

Interest income is the revenue generated from investments, loans, or notes receivable. The formula to calculate interest income is:

Interest Income = Face Value of Investment * Interest Rate

Using the example above, if your business holds the $10,500 note receivable for the entire year, the interest income would be:

Interest Income = Face Value of Investment * Interest Rate

Interest Income = $10,500 * 0.05

Interest Income = $525

So, the interest income from the note receivable would be $525.

These formulas can be adjusted for different scenarios, such as varying principal amounts, interest rates, and time periods. If you use different numbers, simply plug them into the formulas to calculate the face value of the note receivable and the interest income.