On December 31, 2020, Asbestos Co. performed environmental consulting services for Duke Co. Duke was short of cash, and Asbestos agreed to accept a $200,000 zero-interest-bearing note due December 31, 2022, as payment in full. Duke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Asbestos is much more creditworthy and has various lines of credit at 6%.

Instructions

1. Complete the amortization table for the second year (round to whole dollars). You do NOT need to copy the whole table
2. Prepare the journal entry for Asbestos Co. on December 31, 2020.
3. Prepare the journal entry for Asbestos Co. on December 31, 2021.
4. Prepare the journal entry for Asbestos Co. on December 31, 2022.

	Cash	Effective		Carrying
	received	Interest	Discount	value
2020 Issuance				165,290
Year 2021	0	16,528	16,528	181,818
Year 2022	??	??	??	??