On January 2, 2008, Healthy Farms purchased from Deerfield Ag Center a new piece of machinery that had a cash selling price of \($127,255\). As payment, Healthy gave Deerfield a \($150,000\), five-year note that provided for annual interest payments at 6%. At the time of the sale, the interest rate normally charged to farms with Healthy’s credit rating is 10%.

Required:
1. Prepare Deerfield’s journal entry to record the sale.

2. Prepare the journal entry to record the first interest payment Deerfield received on December 31, 2008.
3. Determine the note receivable balance that Deerfield will report on December 31, 2009.