An excerpt from the financial statement of Lombardy Services follows. The information refers to a single note receivable. 1997 1996 Balance Sheet Note receivable $20,000 $20,000 Less: Discount on note receivable Income statement 1,200 1,600 Interest revenue $ 1,656 $ 1,622 REQUIRED:

a. What is the effective interest rate on the note receivable?

b. What is the stated interest rate on the note receivable? Chapter 1 1 Long-Term Liabilities: Notes, Bonds, and Leases 581

c. Provide the journal entry to record interest revenue during 1997.

d. What is the present value of the note’s future cash inflows as of December 31,1997, using the effective interest rate on the date when the note was issued?