Sale of inventory on January 2, 20x5 on the following terms:

blended payments of principal and interest of 4% over 5 years

with the first payment due on December 31, 20x5. The

customer's incremental borrowing rate is 8%. Floyd's

incremental borrowing rate is 6%. The entry to record the initial

transaction was to debit Notes Receivable and credit revenue for

$1,500,000. The first payment was received at year-end and was

credited to the Notes Receivable Account.

Required - Prepare the adjusting journal entries to adjust the notes receivable/revenue

accounts at December 31, 20x5.