The effective-interest method to amortize the discount

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Reference no: EM131287828

On January 1, 2017, Cullumber Company issued a $1,238,700, 5-year, zero-interest-bearing note to Riverbed Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2018 Cullumber fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Riverbed Bank decided that the loan was impaired. Cullumber will probably pay back only $825,800 of the principal at maturity.

Assuming that both Cullumber Company and Riverbed Bank use the effective-interest method to amortize the discount, prepare the amortization schedule for the note. (Round answers to 0 decimal places, e.g. 5,275. Do not leave any field blank. Enter 0 for the amounts.)

Reference no: EM131287828

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