Sophia Incorporated issued a $105,000, five-year, zero-interest-bearing note to Angelica Corp. on January 1, 2017 and received $52,000 cash. Sophia uses the effective interest method.
(a) Using a financial calculator and computer spreadsheet functions, calculate the implicit interest rate.
(b) Prepare Sophia's journal entry for the January 1 issuance.
(c) Prepare Sophia's journal entry for the December 31 recognition of interest.
(d) Prepare an effective-interest amortization table for the note.