On January 1 of Year 1, Jet Air Inc. contracted with Systems Plus Inc. to manufacture equipment. Jet Air Inc. issued a $135,000 note to Systems Plus Inc. in exchange for the equipment. The note requires 5% interest payments annually over 3 years on December 31 of each year. Although the fair value of the equipment is not reasonably determinable, it was determined that 10% was a reasonable rate of interest for such a transaction. Provide journal entries to be made by Jet Air Inc. at each of the following dates.

a. January 1, Year 1Note issuance.

b. December 31, Year 1Interest payment.

c. December 31, Year 2Interest payment.

d. December 31, Year 3Interest payment.

e. December 31, Year 3Note payment at maturity.