Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $36,000. The customer paid $6,000 cash and signed a three-year, $30,000 note that specified a stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10 %. Required a. Compute the present value of this note. b. Prepare an effective interest schedule for this note. c. Prepare entries required by Stealth for this note on January 1 of Year 1, and December 31 of Year 1, Year 2, and Year 3. Note: Round answers to the nearest whole dollar. a. Present value of note: $ 0 x b. Interest Discount on Note Receivable, Date Cash Revenue N.R. Net (Stated Interest) (Market Interest) (Carrying Amortization Value) Jan. 1, Year 1 $ 0x Dec. 31, Year 1 $ 0* $ 0 * $ 0x 0x Dec. 31, Year 2 0 * 0 % 0x Dec. 31, Year 3 0% 0x 0 00 0 Total $ 0 $ 0 $ 0 C. Date Jan. 1, Year 1 Account Name Dec. 31, Year 1 To record sale of equipment. To record interest on note. Dec. 31, Year 2 To record interest on note. Dec. 31, Year 3 Dec. 31, Year 3 To record interest on note. To record settlement of note. > > > > Dr. Cr. OOOO 0 0x 0 0 0 0% 0 0x 0 0 0 < < < 000 > > > > > > o o > > 0x 0x 0x 0x 0% 0x 0 0x 0 0% 0 0x 0 0% 0 0x