Amortization schedule for note where explicit interest differs from market rate of interest. Blaydon Company acquires a computer from Orange Computer Company. The cash price (fair market value) of the computer is \(\$ 36,157\). Blaydon Company gives a three-year, interest-bearing note with maturity value of \(\$ 40,000\). The note requires annual interest payments of 8 percent of face value, or \(\$ 3,200\) per year. The interest rate implicit in the note is 12 percent per year.

a. Prepare an amortization schedule for the note.

b. Prepare journal entries for Blaydon Company over the life of the note.