On January 1, 1993, Sega Inc. made a loan to Nintendo Corp. In exchange, Sega Inc. received a $200,000, 4-year note, bearing interest at 10% payable annually on December 31. The market rate of interest is 5%. Sega Inc. has a December 31 year-end while Nintendo Corp.'s year-end is September 30.

Instructions:

1. Calculate the present value of the note

2. Calculate the amount of discount or premium on the note.

3. Complete the following schedule of note amortization.

Date	Cash Received	Interest Income	Discount/Premium Amortized	Carrying Amount of Note
January 1, 1993	0	0	0
December 31, 1993
December 31, 1994
December 31, 1995
December 31, 1996
December 31, 1996 (final payment)		0	0

4. Record the journal entries for Sega Inc. on January 1, 2004 and December 31, 2004.

Hint: There are 2 required journal entries. Some journal entries may or may not require 3 accounts or more.