4. Discount Note On December 31, 2020, your firm provided the services to the high-end clientele and accepted in exchange a promissory note with a face value of $600,000, a due date of December 31, 2023, and a stated rate of 5%, with interest receivable at the end of each year. The note is considered to have a market rate of 10%. Required a. Prepare a schedule of note discount amortization for this note using the effective interest method b. Prepare the journal entries for the dates indicated in the schedule in part a above. c. Prepare a schedule of note discount amortization for this note using the straight-line method
4. Discount Note
On December 31, 2020, your firm provided the services to the high-end clientele and accepted in exchange a promissory note with a face value of $600,000, a due date of December 31, 2023, and a stated rate of 5%, with interest receivable at the end of each year. The note is considered to have a market rate of 10%.
Required
a. Prepare a schedule of note discount amortization for this note using the effective interest method
b. Prepare the
c. Prepare a schedule of note discount amortization for this note using the straight-line method
d. Prepare the journal entries for the dates indicated in the schedule in part c above.
5. Premium Note
Your firm invested in notes issued by Grove Corporation with $2,000 par value and stated rate of 10% on Jan 1, 2018, due on Dec 31, 2020. The interest will be paid once a year on December 31. The similar notes have effective annual interest rate (market interest rate) of 8%. Your firm closes the books annually on December 31.
Required:
a. Prepare the amortization schedule and journal entries for the dates indicated using the effective interest method
b. Prepare the amortization schedule using the straight-line method.
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