MacWilliams Ltd. sold a $90,000 piece of machinery to a customer on 1 January 20X6, and took back a two year, 2% note receivable. The customer has to pay interest every 31 December, but the $90,000 principal is due only after two years. Market interest rates are 6%.

Required:

1. What is the present value of the note receivable?

2. Record the sale/loan on 1 January 20X6, the interest each 31 December (two times) and the loan repayment on 31 December 20X7. Use the gross method to record the note.

3. Record the transaction, interest, and repayment on the books of the customer.