The next document you find is the accounts receivable listing at December 31 (below). There are some additional year end notes on the file. 1. Absorbent products has reached out to Big Time and have agreed to exchange their total accounts receivable amount for a long-term note. The note is a zero interest note for $25,000, due in 5 years 2. Dairy Whip also has asked to exchange their accounts receivable balance for a long-term note (5 years). The note has a stated interest rate of 10%. Market rate for the note is 8%. Interest is paid yearly. 3. Life Time also has asked to exchange their accounts receivable balance for a short-term note. The note has a stated interest rate of 10%. Market rate for the note is 8%. Interest is paid yearly. 4. Big Time Transport is a related company by common ownership 5. Feathers Corp was a prepayment for some delivery work to be done next month. It was put in accounts receivable in error. 6. A Company we wrote off last year, No Cash, has paid Big Time $20,000 of past receivables. 7. Big Time receives a call from the management of Bonanza. They are going to file for bankruptcy protection and wanted to tell Big Time that they would not receive the amounts owing. Company Name Current over 30 days over 60 days over 90 days over 120 days TOTAL A/R Life Time 2,138 3,232 5,370 Absorbent Products 3,778 4,074 4,990 5,680 18,522 Dale inc. 2,004 6,996 9,000 Toque Corp 1,110 2,027 3,137 Davis Transport 2,128 7,665 9,793 Big Time Transport 4,068 6,325 5,079 3,017 18,489 All in Inc. 8,166 8,482 16,648 Feathers Corp 4,669 4,669 2254683 BC Ltd. 3,210 2,988 6,198 Big Mac Bros. Transport 2,614 2,614 McDaniels 6,158 3,913 10,071 Burger Queen 6,881 3,425 10,306 Dairy Whip 4,937 1,780 3,504 10,221 Bonanza 2,025 2,025 Sweet Caroline Inc. 7,313 7,313 50,459 41,835 21,086 9,787 11,209 134,376 Big Time uses the aged receivable allowance method to estimate their credit losses. From past history they believe the rates are Current over 30 days over 60 days over 90 days over 120 days 2% 5% 15% 30% 75% Required: What is the implied interest rate on the note to Absorbent Products? What journal entry would you record at December 31, year 1 for all the new notes? What disclosures are required? What is the value of the Dairy Whip Note Receivable? What would be the amounts allocated each year to interest and the note? (you can prepare an amortization table to show the values). What is the journal entry for year 3? Prepare the year end entry for the accounts receivable loss on impairment estimate. Assume the Allowance for expected credit losses has a $25,000 DR balance before any of the adjustments above. Prepare a financial statement note.