Indigo Corp. was experiencing cash flow problems and was unable to pay its $102,000 account payable to Blue Corp. when it fell due on September 30, 2020. Blue agreed to substitute a one-year note for the open account. The following two options were presented to Indigo by Blue Corp.:

Option 1:		A one-year note for $102,000 due September 30, 2021. Interest at a rate of 8% would be payable at maturity.
Option 2:		A one-year noninterest-bearing note for $110,160. The implied rate of interest is 8%.

QUESTION:

A) Assume that; Assuming Indigo Corp. chooses Option 1, prepare the entries required on Blue Corp.s books on September 30, 2020, December 31, 2020, and September 30, 2021. t Blue Corp. has a December 31 year end.

B) Assuming Indigo Corp. chooses Option 2, prepare the entries required on Blue Corp.s books on September 30, 2020, December 31, 2020, and September 30, 2021.