On January 1, Investor acquired a 7 year, $600,000 zero-interest note from Borrower. The yield (market interest rate) at the time of issuance was 12%, compounded annually.

For Investor: 1. Record the journal necessary on January 1.

2. Record the journal entry necessary on December 31. (Assuming no additional entries were made since January 1)

For Borrower: 3. Record the journal necessary on January 1.

4. Record the journal necessary on December 31. (Assuming no additional entries were made since January 1)