Culver Corporation issued a 5-year, $65,000, zero-interest-bearing note to Brown Company on January 1, 2017, and received cash of $32,317. The implicit interest rate is 15%. Prepare Culvers journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest.

The journal would be

Cash... 32,317 Discount on Note Payable.... 32,683 Note Payable..... 65,000

Interest expense... 4,848 Discount on Note Payable... 4,848

To get 4,848, I have to caluculate 32,317*0.15= 4,848 Why I can't do this by 32,683*0.15. Also, I don't know why there is implicit rate when there is no interest.

Please help me.

Thanks!