Part one

On October 1, 2020, Cheyenne Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $193,200, 10% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Cheyennes financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Cheyenne Equipment Company for the entire term of the note. Assume that reversing entries are not made on January 1, 2021 and January 1, 2022.

Part Two

Date Account Titles and Explanation Debit Credit Assume that Monty Company has recently fallen into financial difficulties. By reviewing all available evidence on December 31, 2020, one of Monty's creditors, the National American Bank, determined that Monty would pay back only 65% of the principal at maturity. As a result, the bank decided that the loan was impaired. The loss is estimated to be $254,700. What entry should National American Bank make to record this loss? (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020