Please review part a and b for correctness and help with part c

On December 31, 2019, Green Company finished consultation services and accepted in exchange a promissory note with a face value of $850,000, a due date of December 31, 2022, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 10%.

The following interest factors are provided:

Interest Rate

Table Factors For Three Periods 5% 10%

Future Value of 1 1.15763 1.33100

Present Value of 1 .86384 .75132

Future Value of Ordinary Annuity of 1 3.15250 3.31000

Present Value of Ordinary Annuity of 1 2.72325 2.48685

Instructions

1. Determine the present value of the note. $744,313

Cash Interest 850,000 x 0.05 x 12/12 = $42,500

Present value of interest = $42,500 2.48685 = $105,691

Present value of Face = $850,000 .75132 = $638,622

PV of Interest + PV of Face = PV of Note

105,691 + 638,622 = $744,313

2. Ignore your answer to part a and assume that the present value of the note is $720,000 all other terms associated with the note are the same. Complete the following Amortization Table for ALL years under the effective interest method. (Round to whole dollars). Please note the titles of the columns in the amortization table.

THE DUE DATE OF THE NOTE IS DECEMBER 31, 2022.

Date Interest Cash Discount Discount Carrying

Recognized Interest Amortized Balance Value

12/31/19 -0- -0- -0- 130,000 720,000

12/31/20 72,000 42,500 29,500 100,500 749,500

(72,000x0.10x12/12) (850,000x0.05x12/12) (72,000-42,500) (130,000-29,500) (850,000-100,500)

12/31/21 74,950 42,500 32,450 68,050

12/31/22 110,550 42,500 68,050 -0- 850,000

(c) Prepare the following journal entries: