Xavier Company has a customer that is just starting up, and the customer wants to acquire merchandise but defer payment for several years. The customer wants a 4-year note, with 10% interest payable at the end of each year. The current market interest rate is 12%. On 1/1/12, Xavier agrees to accept a 10%, $8,000 Note Receivable (N/R), payable in 4 years, including interest.
Required:
(1) Based on the information above, how much merchandise will Xavier give to the customer for this note?
(2) How will Xavier record the issuance of the note receivable?
(3) Prepare the amortization table over the life of the note.
(4) How will Xavier record the receipt of the first interest payment on 1/1/13?