On January 1, 20X1, the company received a $10,000 three-year note bearing interest at 10% annually. The annual interest is received at each December 31. The market interest rate is 12% annually. September 30 is the company’s reporting date. The company used the effective interest method to account for this long-term note receivable.

                             Cash Received        Interest Income    Discount Amortized    Carrying Amount    

Jan 1, 20x1                                                                                                                         9,520

Dec 31, 20x1          1,000                            1,142                            142                            9,662

Dec 31, 20x2          1,000                            1,159                            159                            9,821

Dec 31, 20x3          1,000                            1,179                            179                          10,000

Required:

Prepare journal entries on September 30, 20X2, and December 31, 20X2 (Note: round to the nearest dollar).