Shady Equipment sells a truck to Fred for $130,000 on January 1, 2016. Payment of $130,000 is received two years later and interest is paid at the end of two years. The truck is delivered two years later. The market rate of interest is 8%.

1. Refer to Shady Equipment. How much sales revenue will Shady report on January 1, 2016?

2. Refer to Shady Equipment. How much interest expense will Shady report over the term of the contract?