On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5%...
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Accounting
On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000 promissory note with a due date of December 31, 2024. Interest is receivable on January 1 of each year. Notes with similar risk have a market rate of interest of 10%.
Set financial calculators to zero decimal place.
Required:
(a) Determine the value of the following:
N =
I/Y =
PMT =
FV =
(b) The present value of the note was
(c) Prepare a Schedule of Note Discount/Premium Amortization for Slack Company under the effective interest method.
Slack Company
Schedule of Note Discount/Premium Amortization
Effective Interest Method
Date
Cash
Interest
Amortized Amount
Carrying Value of Note
Jan 1, 2022
Dec 31, 2022
Dec 31, 2023
Dec 31, 2024
(d) Prepare the journal entries on the following dates:
Jan 1, 2022
Dr.
Cr.
Dec 31, 2022
Dr.
Dr.
Cr.
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