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Financial Accounting

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Long-Term Notes Payable

FINACT-CGTACJ

Bellevue Medical Center issued a 5-year, zero interest bearing note for \$100,000 from Miller Savings and Loan on January 1, 2011. At that time, the market rate for loans of similar risk was 12%.

NOTE:

The present value of n=5, i=10% is 0.6209
The present value of n=5, i=12% is 0.5674

(I): What is the amount of discount recorded for this note by Bellevue Medical on the date of issuance (in \$)?

(II): What is the amount of cash received by Bellevue Medical on the date of issuance (in \$)?

(III): Bellevue Medical's year-end adjusting journal entry (AJE) related to this transaction would include a debit to Interest Expense for what amount (rounded to the nearest whole dollar) (in \$)?

(IV): What is the carrying value of the note on Bellevue Medical's books at December 31, 2011 (in $)?