Brestovacki Corporation issued a $50,000, five-year, 5% note to Jernigan Corp. on January 1, 2020, and received a piece of equipment that normally sells for $38,912. The note requires annual interest payments each December 31. The market interest rate for a note of similar risk is 11%.

(a) Using (1) a financial calculator or (2) Excel function Rate, calculate the implicit interest rate.

(b) Prepare Brestovacki's journal entry for the January 1, 2020 issuance. 

(c) Prepare the entry for the December 31, 2020 interest payment using the effective interest method.