Waterway Company commonly issues long-term notes payable to its various lenders. Waterway has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Waterway has elected to use the fair value option for the long-term notes issued to Barclays Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates, not credit risk.

	carrying value	fair value
December 31, 2017	$58,700	$58,700
December 31, 2018	$43,200	$41,600
December 31, 2019	$35,500	$37,300

(a) Prepare the journal entry at December 31 (Waterways year-end) for 2017, 2018, and 2019, to record the fair value option for these notes. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.Credit account titles are automatically indented when amount is entered. Do not indent manually.)

date	account title and explanation	debit	credit
12/31/17
12/31/18
12/31/19

b) At what amount will the note be reported on Waterways 2018 balance sheet?

(c) What is the effect of recording the fair value option on these notes on Waterways 2019 income?