Recording Entries for Long-Term Note Receivable; Effective-Interest Method

On January 1, 2020, Jacobs Company sells land financed through a $40,000 note, issued by Andress Company. The note is a $40,000, 8%, annual interest-bearing note. Andress agrees to repay the $40,000 proceeds on December 31, 2021. The prevailing interest rate on similar notes is 11%. Assume that the cost of the land is equal to the fair value of the note.

Required

Prepare all entries for Jacobs over the note term, including any year-end adjustments. Use the effective interest method to amortize the discount.

Date	Account Name	Dr.	Cr.
Jan. 1, 2020	?	?	?
	?	?	?
	Land	?	?
Dec. 31, 2020	Cash	?	?
	?	?	?
	?	?	?
Dec. 31, 2021	Cash	?	?
	?	?	?
	?	?	?
	To record interest on note
Dec. 31, 2021	?	?	?
	?	?	?
	To record settlement of note

r the note term, including any year-end adjustments. Use the effective interest method to amortize the discount