On December 31, 2019, Sheffield Company finished consulting services and accepted in exchange a promissory note with a face value of $860,000, a due date of December 31, 2022, and a stated rate of 6%, with interest receivable at the end of each year. The fair value of the services is not readily determinable, and the note is not readily marketable. Under the circumstances, the note is considered to have an appropriate imputed rate of interest of 12%.

The following interest factors are provided:

	Interest Rate
Table Factors for Three Periods	6%		12%
Future Value of 1	1.19102		1.40493
Present Value of 1	.83962		.71178
Future Value of Ordinary Annuity of 1	3.18360		3.37440
Present Value of Ordinary Annuity of 1	2.67301		2.40183

1. Compute the present value of the note. (4 pts)

2. Prepare the journal entry required on Sheffield 's books at December 31, 2020 in the following format: (7 pts)

Dr. xxxxx $$$

Cr. xxxxx $$$

3. Prepare the journal entry required on Sheffield 's books at December 31, 2021 in the following format: (7 pts)

Dr. xxxxx $$$

Cr. xxxxx $$$

4. Compute the carrying value of the note at December 31, 2021. (2 pts)