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

On January 1, 2020, Jacobs Company sells land financed through a $64,000 note, issued by Andress Company. The note is a $64,000, 8%, annual interest-bearing note. Andress agrees to repay the $64,000 proceeds on December 31, 2021. The prevailing interest rate on similar notes is 9%. 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	Answer

Answer	Answer
	Answer

Answer	Answer
	Land	Answer	Answer
Dec. 31, 2020	Cash	Answer	Answer
	Answer

Answer	Answer
	Answer

Answer	Answer
Dec. 31, 2021	Cash	Answer	Answer
	Answer

Answer	Answer
	Answer

Answer	Answer
	To record interest on note
Dec. 31, 2021	Answer

Answer	Answer
	Answer

Answer	Answer
	To record settlement of note