Stewart receives a $20,000 payment three years in advance of a scheduled appearance as a graduation speaker at a major state university. A four percent interest rate applies.
1. Prepare the journal entry to record Stewart's initial receipt of the $20,000 payment.
2. Prepare journal entries to record any interest revenue or expense recognized by Stewart for years one, two and three of the contract.
3. Prepare a journal entry to record revenue when Stewart delivers his graduation speech.