On December 31, 2020, Iva Majoli Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-bearing note. The note was issued to yield 10% interest. Unfortunately, during 2022, Majoli began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.

1.Instructions: Complete the note amortization table.

Date

Cash Received

Interest Revenue

Discount Amortization

Discount Balance

Carrying Value

2. Instructions: Journalize the transactions for the note origination and interest recognition for the first 2 years.

3. Recalculate the carrying value of the note pursuant to the events that occurred on December 31, 2022.

4. Instructions: Prepare the journal entry to record the note impairment.

Instructions: Provide the net realizable presentation of the notes receivable as it would appear on the December 31, 2022 balance sheet.

	12/31/2022