Preparing Entries and Interest Schedule for Long Term Note Receivable Effective Interest Method On July 1, 2020, Stealth Company sold a machine (classified as inventory) that had a list price of $72,000 The customer paid $12,000 cash and signed a three year, $60,000 note that specified a stated interest rate of 3 Annual interest on the full amount of the principal is payable each June 30 The principal is payable on June 30, 2023 The market rate of interest for a note of this risk is 10 Required Round answers to the nearest whole dollar a Compute the present value of this note $Answer b Prepare an effective interest schedule for this note Date Stated Interest Market Interest Discount Amortization Note Carrying Value Jul 1, 2020 Answer Jun 30, 2021 Answer Answer Answer Answer Jun 30, 2022 Answer Answer Answer Answer Jun 30, 2023 Answer Answer Answer Answer c Prepare all entries required by Stealth for this note through its maturity date, including year end adjustments Date Account Name Dr Cr Jul 1, 2020 AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A 12,000 Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer Sales Revenue Answer Answer Jun 30, 2021 Cash Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer Jun 30, 2022 Cash Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer Jun 30, 2023 Cash Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer To record interest on note Jun 30, 2023 AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN A Answer Answer To record settlement of note

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Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On July 1, 2020, Stealth Company sold a machine (classified as inventory) that

Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method

On July 1, 2020, Stealth Company sold a machine (classified as inventory) that had a list price of $72,000. The customer paid $12,000 cash and signed a three-year, $60,000 note that specified a stated interest rate of 3%. Annual interest on the full amount of the principal is payable each June 30. The principal is payable on June 30, 2023. The market rate of interest for a note of this risk is 10%.

Required

Round answers to the nearest whole dollar.

a. Compute the present value of this note.

$Answer

b. Prepare an effective interest schedule for this note.

Date	Stated Interest	Market Interest	Discount Amortization	Note Carrying Value
Jul. 1, 2020				Answer
Jun. 30, 2021	Answer	Answer	Answer	Answer
Jun. 30, 2022	Answer	Answer	Answer	Answer
Jun. 30, 2023	Answer	Answer	Answer	Answer

c. Prepare all entries required by Stealth for this note through its maturity date, including year-end adjustments.

Date	Account Name	Dr.	Cr.
Jul. 1, 2020	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	12,000	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	Sales Revenue	Answer	Answer
Jun. 30, 2021	Cash	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
Jun. 30, 2022	Cash	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
Jun. 30, 2023	Cash	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	To record interest on note
Jun. 30, 2023	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	AnswerCashAccounts ReceivableAllowance for Doubtful AccountsInterest ReceivableReceivable from FactorNote ReceivableDiscount on Note ReceivablePayable to Seller of ReceivablesRefund LiabilityRecourse LiabilityNote PayableSales RevenueSales ReturnsSales DiscountSales Discount ForfeitedFinancing RevenueInterest RevenueCost of Goods SoldBad Debt ExpenseFinance ExpenseInterest ExpenseLoss on Sale of NoteLoss on Sale of ReceivablesN/A	Answer	Answer
	To record settlement of note