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.

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

Year Amount Interest 15% Closing Amount

1 48599 7289.85 55888.85

2 55888.85 8383.33 64272.18

3 64272.18 9640.83 73913

4 73913.00413 11086.95 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