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. (The implicit rate of interest for this note is 11%)

Additional information:

a. Assuming MAC uses straight-line method to amortize the notes 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 notes discount.

Required:

i. Prepare the journal entries to record the sale on January 1, and the interest accrual on December 31, 2020 under assumption a and b.

ii. What is the balance of note receivable at December 31, 2023? Prepare the journal entry to record the cash proceeds upon settlement at December 31, 2023.