PLEASE WRITE DOWN ALL PROCESS OF CALCULATION ( DO NOT USE EXCEL), THE KEYS ARE SHOWN.

Problem 3. Recording issuance of note receivable (14 points). On December 31, 2021, Blue Company finished consultation services and accepted a promissory note with a face value of $500,000. The notes maturity date is December 31, 2023, and includes a stated rate of 3%. Accrued interest will be paid on December 31 of each year, while the face value of $500,000 will be paid at maturity. 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 4%.

You may use the tables to find the appropriate PV factors, or you may use your financial calculator. Round your answers to the nearest dollar.

What is the Fair Value of the note on December 31, 2021? (In other words, at what amount should the note be recorded on Blue Companys books?)

Note Receivable 500,000

Discount on Note Receivable 9,430

Service Revenue 490,570

Complete the Schedule of Note Discount Amortization for Blue Company under the effective interest method. (Round to whole dollars.)

Date	Beginning Outstanding Balance	Interest Revenue	Cash Received	Amortization of Discount	Ending Outstanding Balance
12/31/2021	0	0	0	0	490,570
12/31/2022	490,570	19,623	15,000	4,623	495,193
12/31/2023	495,193	19,808	15,000	4,808	500,000
Totals (not graded)		$39,431	$30,000	$9,431