Samson Corporation issued a 4-year, $85,000, zero-interest-bearing note to Brown Company on January 1, 2014, and received cash of $48,599. The implicit interest rate is 15%.

Prepare Samson’s journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest.

Explanation:

first of all we need to identify the present value of laibility

v= 85000/(1+15%)^4

Pv = 48599 which is equal to cash recieved.

We need to perpare amotization schedule to recognize closing laibiltity carying amount and interst expense

Amortization schedule

YearAmount    Interest 15%Closing Amount

1        48599         7289.85    55888.85

2      55888.858383.33    64272.18

3      64272.18  9640.83    73913

4      73913.0041311086.95  85000

Entries

Cash 48599

  Long term Liability 48599

To record the long term laibility

Interest Expense 7289.85

          Laibilty            7289.85

To record the interest expense on the laibility

agriculture and oil. natural resources, industry.

answer; 33,000;