Headland Company commonly issues long-term notes payable to its various lenders. Headland has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Headland 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, 2020		$58,600		$58,600
December 31, 2021		47,000		45,500
December 31, 2022		32,400		34,600

(a) Prepare the journal entry at December 31 (Headlands year-end) for 2020, 2021, and 2022, 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 Titles and Explanation	Debit	Credit
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2022

(b) At what amount will the note be reported on Headlands 2021 balance sheet?

Note to be reported on Headlands 2021 balance sheet

$

(c) What is the effect of recording the fair value option on these notes on Headlands 2022 income?

The effect of recording the fair value option would result in unrealized holding gainloss of

$