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On December 31, 2019, ABC outdoors received a 5%, $300,000, 3-year note from a customer...

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Accounting

On December 31, 2019, ABC outdoors received a 5%, $300,000, 3-year note from a customer for services it rendered during 2019. The note pays interest annually and the market interest rate for notes of this kind was 10% at that time.

  1. Record the necessary journal entries on Dec. 31, 2019.
  2. Prepare a discount (or premium) amortization table that clearly shows the cash interest received, the interest revenue, the discount (or premium) amortized and the carrying (or Book) value of the note at the end of each year in the life of the note.
  3. Record all the necessary journal entries at the end of each year in the life of the note (i.e., Dec, 31, 2020, Dec. 31, 2021, and Dec. 31, 2022).

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