Notes receivable Problem: On January 1, 2025, Shetland Co. loans $252,510 to Durham Corporation in exchange for a $300,000 zero-interest-bearing promissory note payable in 2 years. The market rate of interest for a transaction of this nature for Durham is 9%. Shetland has a calendar year-end, and it uses the effective-interest method. (1) Write the journal entry for Shetland Co. to recognize the loan (show calculations). 1/1/2025:

(2) Write the journal entry for Shetland Co. to recognize the interest earned during 2025 (show calculations). 12/31/2025:

(3) What is the carrying value of the promissory note as of 12/31/2025? (show calculations).

(4) Write the journal entry for Shetland Co. to recognize the interest earned during 2026 (show calculations). 12/31/2026:

(5) Write the journal entry to recognize the receipt of repayment of the note. 1/1/2027: