The Stridewell Wholesale Shoe Company manufactures athletic shoes that it sells to retailers. On May 1, 2016, the company sold shoes to Harmon Sporting Goods. Stridewell agreed to accept a $700,000, 6-month, 12% note in payment for the shoes. Interest is payable at maturity. Stridewell would account for the note as follows:

1. Interest Bearing Note

2. Noninterest-bearing Note - If the preceding note could be packaged as a $700,000 noninterest-bearing note (NO DISCOUNT RATE IS GIVEN)