X Company acquires a computer from Y Computer company. The cash price of the computer is $37,938. X Company gives a three-year, interest bearing note with a maturity value of $40,000. The note requires annual payments of 6% of the face value, or $ 2,400 per year, payable at the end of the year. The interest rate implicit in the note is 8% per year.

1)Prepare an amortization schedule for the note.

2)Prepare journal entries for X company over the life of the note. Ignore depreciation expenses.