On January 1, 2002, Lost Valley Realty sold a tract of land to three doctors as an investment. The land, purchased 10 years ago, was carried on Lost Valley's books at a value of \($125,000.\) Lost Valley received a non-interest-bearing note for \($220,000\) from the doctors.The note is due December 31, 2003- There is no readily available market value for the land, but the current market rate of interest for comparable notes is 10%.

Instructions:
1 . Give the journal entry to record the sale of land on Lost Valley's books.
2. Prepare a schedule of discount amortization for the note with amounts rounded to the nearest dollar.
3. Give the adjusting entries to be made at the end of 2002 and 2003 to record the effective interest earned.