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Prepare the journal entries for the issue of the note

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Question - On January 1, 2021 BEE Corp issues a 3-year interest-bearing N/R with face value of $20,000 and an interest rate of 5% payable annually on December 31. The note was issued to a customer in exchange for services provided. The market rate for a N/R of similar risk is 8%.

A. Calculate the present value of this N/R. Round amounts to the nearest dollar.

B. What is the amount of the "discount" that will be amortized over the 3-years of this N/R? Round to the nearest dollar.

C. Prepare an amortization schedule (effective interest method) for this note over the three years. Round to the nearest dollar (there will be a few dollars difference, due to rounding errors - no deduction for this!)

D. Prepare the journal entries for the issue of the note on January 1, 2021 and the first interest payment on December 31, 2021.

Reference no: EM133059196

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