The Bean Company makes a sale with an invoice price of $97,000 on 10/1/14. The note is due on 10/1/17. There is no interest rate stated in the note. The market rate for similar notes is 10%. Assume annual compounding of interest. Prepare the journal entries for 10/1/14, 12/31/14, 10/1/15, and 12/31/15.
Do I need to calculate the future value of the $97,000, or just add the interest revenue and interest receivable to the principal yearly?
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