Preparing Entries and Interest Schedule for Long-Term Note Receivable; Effective Interest Method On January 1 of Year 1, Stealth Company sold a machine (classified as inventory) that had a list price of $36,000. The customer paid $6,000 cash and signed a three-year, $30,000 note that specified a stated rate of 3%. Annual interest on the full amount of the principal is payable each December 31. The principal is payable on December 31, three years later. The market rate for a note of this risk is 10%.

Required

a. Compute the present value of this note.

b. Prepare an effective interest schedule for this note.

c. Prepare entries required by Stealth for this note on January 1 of Year 1, and December 31 of Year 1, Year 2, and Year 3.

Note: Round answers to the nearest whole dollar.

a. Present value of note: $

b.

c.

b. C