On December 31, 2010 Brown Company finished consultation services and accepted in exchange a zero bearing promissory note with a face value of $400,000 and a due date of December 31,2013. The fair value of the services is not readily determinable and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed (market rate of 5%
Factors:
PV OF $1 (3 PERIODS 5%) .86384
PV OF ANNUITY ( 3 PERIODS 5%) 2.72325
1) Determine the present value of the note
2) Prepare the journal entry to record the issuance of the note at December 31,2010
3) Show the year end journal entries of the next 3 years including the final entry to close the note.