On January 1, 2021 BEE Corp issues a 3-year interest-bearing N/R with face value of $20,000 and an interest rate of 5% payable annually on December 31. The note was issued to a customer in exchange for services provided. The market rate for a N/R of similar risk is 8%.

A. Calculate the present value of this N/R. Round amounts to the nearest dollar.

B. What is the amount of the discount that will be amortized over the 3-years of this N/R? Round to the nearest dollar.

C. Prepare an amortization schedule (effective interest method) for this note over the three years. Round to the nearest dollar (there will be a few dollars difference, due to rounding errors no deduction for this!)

D. Prepare the journal entries for the issue of the note on January 1, 2021 and the first interest payment on December 31, 2021.

Please note To answer this question, create an amortization schedule (in table format) showing the cash amount received each year, the interest income, amortization of the discount and the end of year carrying value of the note. :