Homework Answers
Answer:
Cash received:
Cash received = Face value x 0.82193 present value factor (4%, 5 years)
= $80,000 x 0.82193
= $65,754
Journal entry at Dec 31,2021:
| Date | Account title and Explanation | Debit | Credit |
| Dec.31 | Interest expense* | $2,630 | |
| Notes payable | $2,630 | ||
| [To record interest expense] |
*Interest expense = Carrying amount x Market rate
=$65,754 x 4%
=$2,630
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