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On January 1, Investor acquired a 7 year, $600,000 zero-interest note from Borrower. The yield (market...

On January 1, Investor acquired a 7 year, $600,000 zero-interest note from Borrower. The yield (market interest rate) at the time of issuance was 12%, compounded annually.

For Investor: 1. Record the journal necessary on January 1.

2. Record the journal entry necessary on December 31. (Assuming no additional entries were made since January 1)

For Borrower: 3. Record the journal necessary on January 1.

4. Record the journal necessary on December 31. (Assuming no additional entries were made since January 1)

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The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

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