On January 1, 2017, Larkspur Co. borrowed and received $464,000from a major customer evidenced by a zero-interest-bearing note due in4years. As consideration for the zero-interest-bearing feature, Larkspur agrees to supply the customer's inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is10%.

(a)Prepare the journal entry to record the initial transaction on January 1, 2017.

(b)Prepare the journal entry to record any adjusting entries needed at December 31, 2017. Assume that the sales of Larkspur's product to this customer occur evenly over the4-year period.