Gullible Company is a dealer in equipment. On December 31, 2019, the entity sold equipment in exchange for a noninterest-bearing note requiring five annual payments of 500,000. The first payment was made on December 31, 2020. The market interest for similar notes was 8%. The relevant present values factors are:

PV of 1 at 8% for 5 periods                    0.68

PV of an ordinary annuity  of 1 at 8% for 5 periods           3.99

Required:

1. Prepare journal entries for 2017 and 2018.

2. Determine the carrying amount of the note receivable on December 31, 2018.

3. Determine the interest income for 2019.