On January 1, 2017 Monty Co. borrowed and received $516,000 from a major customer evidence by a zero interest bearing note due in 3 years. As consideration for the zero interest bearing feature, Monty agrees to supply the customers inventory needs for the loan period lower than the market price. The appropriate rate at which to impute interest is 9%.

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

b. Prepare the journal entry to record any adjusting entires needed at December 31, 2017. Assume that the sales of Montys product to this customer copy evenly over the 3 year period.