Legal Beagle Law Services Inc. received a $400,000, three-year, 6% promissory note from a corporate client on May 1, 20X1 as payment for legal services rendered. Interest on the note is paid semi-annually on October 31 and April 30. Legal Beagle Law Services Inc. can borrow in the open market at 10% and this particular corporate client can borrow in the open market at 7%. Legal Beagle Law Services Inc. and this corporate client are both listed on the TSX and have December 31 year end.

Required:

1. Prepare an effective-interest amortization schedule using Excel, showing only the first two rows of the table, for the promissory note received by Legal Beagle Law Services Inc. on May 1, 20X1. Round all dollar amounts to the nearest dollar.
2. Prepare all necessary journal and/or adjusting entries for Legal Beagle Law Services Inc. for the year ended December 31, 20X1 in relation to the promissory note. Round all dollar amounts to the nearest dollar.