On January 1, 2015, Stiller Co. made a loan to EastCo. In exchange, Stiller Co. received a
Question:
On January 1, 2015, Stiller Co. made a loan to EastCo. In exchange, Stiller Co. received a $45,000, 4-year note, bearing interest at 8% payable annually on December 31. The market rate of interest is 4%. Stiller Co. has a December 31 year-end while EastCo's year-end is August 31. Please make sure your final answer(s) are accurate to the nearest whole number.
a) Calculate the present value of the note.
Present value = $
b) Calculate the amount of discount or premium on the note.
Discount/Premium = $
c) Complete the following schedule of note amortization.
d) Record the journal entries for Financial Services on January 1, 2015 and December 31, 2015. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan).
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann