In Year 1 beginning, Apple Bank issues 3 year loan in the amount of $30.15. The borrower has to pay $5 at the end of Year 1, Year 2 and Year 3. The bank however is expecting the borrower will only pay $4 per year.

1. Calculate the effective interest rate on the loan originated at the beginning of year

2. Write journal entries for loans in the beginning of year 1, year 2 and year 3

(Assume Apple Bank's cash flows on the loans are the same over the years)