On January 1, 2024, Sad Tubs sold a hot tub to Monica, receiving a two-year, noninterest-bearing note in exchange for a hot tub that normally sells for $8,000. The note is for an amount that achieves an effective interest rate of 10% per year, and Sad Tubs views the financing component of this transaction to be significant.

1. Prepare the journal entry to record the sale.
2. Prepare any adjusting entries necessary on December 31, 2024.
3. Prepare any adjusting entries necessary on December 31, 2025.
   1. Record an adjusting entry for interest receivable at an effective interest rate of 10% on the note on December 31, 2025.
   2. Record the entry for receipt of the payment of the note receivable on December 31, 2025