Need Help: On January 1, 2017, Culver Company issued a $1,256,550, 5-year, zero-interest-bearing note to...
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On January 1, 2017, Culver Company issued a $1,256,550, 5-year, zero-interest-bearing note to Larkspur Bank. The note was issued to yield 9% annual interest. Unfortunately, during 2018 Culver fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Larkspur Bank decided that the loan was impaired. Culver will probably pay back only $837,700 of the principal at maturity.
Assuming that both Culver Company and Larkspur Bank use the effective-interest method to amortize the discount, prepare the amortization schedule for the note.
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