Рет қаралды 13,754
Using the present value of the $100,000 face value note we'll work out an amortization schedule and report the journal entries to recognize the note, report interest and amortize the discount along with derecognizing the note.
NOTE THAT AT THE END I SAID THE CASH INTEREST PAYMENT IS AN ADJUSTMENT. IT IS NOT AN ADJUSTMENT, BUT A JOURNAL ENTRY. Normally in a real life situation the interest is accrued by December 31st (end of year) and paid in cash at a later date. In the example I made the cash was paid on December 31st (not super realistic) which is a journal entry since adjusting entries DO NOT INVOLVE CASH! Sorry for the confusion.
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