On january 1, 2020, MAC corporation, a private company engaging in manufacturing and distribution of automobile parts, receives a four year, $100,000 zero interest bearing note in payment of goods sold. The present value of the note equals the agreed upon sales invoice price of $65,873. (Hint: The implicit rate of interest for this note is 11%).

a. Assuming MAC uses the straight line method to amortize the note's discount, prepare the journal entry to record the sale on January 1, and the interest accrual on December 31, 2020.

b. Assuming MAC uses the effective interest method to amortize the note's discount.

Required:

i. Prepare the journal entries to record the sale on January 1, and the interest accrual on December 31, 2020 under assumptions (a) and (b). (8 marks)

ii. What is the balance of the Note Receivable at December 31, 2023? Prepare the journal entry to record the cash proceeds upon settlement at December 31, 2023. (3 marks).