On January 1, 2021, Seller Company sold used equipment to Buyer Company. In exchange, Seller accepted Buyers $25,000, two-year, 2% note, due in full on December 31, 2022, with interest payable annually every December 31.

Additional facts are as follows:

An interest rate of 3% is implicit in the sale/purchase price.

The machine has a book value of $28,000, reflecting accumulated depreciation of $16,000.

RequiredFor the transaction described above:

1. Determine the sale/purchase price of the machine for Seller/Buyer and Sellers gain or loss.

2. Calculate the interest revenue/expense that Seller/Buyer should recognize over the life of the note.

3. Construct an amortization schedule to support the financial reporting for both Seller and Buyer.

4. Prepare all note-related entries that Seller and Buyer should record over the life of the note

*please show steps