Notes Receivable On January 1, 2022, Smith Inc. (Smith) lent money to Jones Company (Jones), accepting Jones 2-year, $85,000 note receivable. The implied interest rate is 12%. Smith follows IFS and has a December 31 year end. Required:

1. Calculate the present value of the note receivable. (1 mark)

2. Prepare Smith's journal entries for the initial transaction, recognition of interest each year, and the collection of $85,000 at maturity on January 1, 2024. (8 marks)