USING A DISCOUNT NOTE LIABILITY TABLE. Panamint Candy Company prepared the following note liability table for $500,000 of 5-year, 9.2% notes issued and sold by Panamint on January 1, 19x38, for $472,000:

REQUIRED:
1. Prepare the entry to recognize the sale of the notes on January 1, 19x3.
2. Prepare the entry to recognize the first interest payment on June 30, 19x38.
3. What interest expense for these notes will Panamint report on its 19x5 income statement?
4. Indicate how these notes will appear in Panamint’s December 31, 19x5, balance sheet.

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INTEREST CHANGE IN PERIOD ENDING INTEREST EXPENSE CASH PAYMENT LIABILITY LIABILITY BALANCE BALANCE At issue $472,000 6/30/x3 12/31/x3 $25,800 $ 23,000 +2,800 474,800 25,800 23,000 +2,800 477,600 6/30/x4 25,800 23,000 +2,800 480,400 12/31/x4 25,800 23,000 +2,800 483,200 6/30/x5 25,800 23,000 +2,800 486,000 12/31/x5 25,800 23,000 +2,800 488,800 6/30/x6 25,800 23,000 +2,800 491,600 12/31/x6 25,800 23,000 +2,800 494,400 6/30/x7 25,800 23,000 +2,800 497,200 12/31/x7 25,800 523,000 -497,200 -0-