Omega Chemicals Ltd. took a $500,000 two-year note receivable from a customer in connection with a major sale transaction on 1 May 20X7. The note required annual 30 April interest payments of 6%, and the principal was due on 30 April 20X9. Omega has a 31 December year-end.

(PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)

Required: 1. Prepare journal entries to record the initial sale transaction and each payment on the books of Omega, assuming that the market interest rate is 6%. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.)3. Prepare journal entries to record the initial sale transaction and each payment on the books of Omega, consistent with requirement 2. Use the gross method to record the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answers to the nearest whole dollar amount.)

2. Assume now that the market interest rate is 7%. Calculate the present value of the note, and prepare a schedule that shows the interest for each year of the note receivable. (Round time value factor to 5 decimal places and intermediate calculations and final answers to the nearest whole dollar amount. Enter all answers in positive.) Present value $ 472,880 Opening Net Liability! Interest Interest Paid/ Closing Net Discount Received Liability Expense/Revenue Receivable Amortization Receivable $ 20,000 $ 33,102 $ 13,102 $ 27,120 $ 500,000 20,000 0 500,000