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On January 1, 2004, Glenn Company sold property to Jefrey Company. There was no established exchange...

On January 1, 2004, Glenn Company sold property to Jefrey Company. There was no established exchange price for the property, and Jefrey gave Glenn a $1,000,000 zero-interest-bearing note payable in 5 equal annual installments of $200,000, with the first payment due December 31, 2004. The fair value of the land was $727,000 on January 1, 2004. Jefrey is uncertain as to the prevailing rate of interest for a note of this type.

What should be the balance of the Discount on Notes Payable account on the books of Jefrey at January 1, 2005 after the first payment is made, assuming that the effective interest method is used?

Be detailed so I can try and understand. Thank you!

This is the full question and I have no other details.

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The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

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