On December 31, 2008, Sorenson Financing Corporation borrowed $90,000 cash on a $110,300, 24-month zero coupon note.

Question:

On December 31, 2008, Sorenson Financing borrowed $90,000 cash on a $110,300, 24-month zero note. Sorenson uses the straight-line method of amortization.

Required:
1. Record the borrowing in Sorenson's journal.
2. Prepare the adjusting entries for December 31, 2009.
3. Prepare the entry to recognize the 2010 interest expense and repayment of the note on December 31, 2010.

Corporation
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A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...