On December 31, 2011, Felix Products borrowed $80,000 cash on a $105,800, 24-month zero percent note. Felix

Question:

On December 31, 2011, Felix Products borrowed $80,000 cash on a $105,800, 24-month zero percent note. Felix uses the straight-line method of amortization.

Required:
1. Record the borrowing in Felix’s journal.
2. Prepare the adjusting entry for December 31, 2012.
3. Prepare the entries to recognize the 2013 interest expense and repayment of the note on December 31, 2013.