Testbank Exercise 160

Swifty Company sells large store-rack systems and frequently accepts notes receivable from customers as payment. Swifty conducts a through credit check on its customers, and it charges a fairly low interest rate (1/2 of 1% payable monthly) on these notes. Swifty has elected to use the fair value option for one of these notes and has the following data related to the carrying and fair value for its note.

		Carrying Value			Fair Value
December 31, 2020		$97,200			$91,800
December 31, 2021		77,760			82,080

Prepare the journal entry at December 31 (Swifty's year-end) for 2020 and 2021, to record the fair value option for these notes.