On January 1, 2014, NewStar sold inventory costing $25,000 to TB Consulting. In return, NewStar received a 4-year, 6% note with a face value of $60,000. Blended payments will be made yearly on December 31, and will include principal and interest. The market rate of interest is 3%. NewStar has a December 31 year-end while TB Consulting's year-end is September 30. Please make sure your final answer(s) are accurate to the nearest whole number.

a) Calculate the annual payments NewStar will receive each year from TB Consulting. Use the stated rate of the note in your calculation.

b) Complete the following payment and amortization schedule for the note.

	Cash received	Interest Income (3%)	Principal reduction	Carrying value of Note
01-Jan-14
31-Dec-14
31-Dec-15
31-Dec-16
31-Dec-17

c) Record the journal entries for NewStar on January 1, 2014 and December 31, 2014.

*** Using Texas instruments BA II Plus