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Question - On January 1, 2016, Happy Tubs sold a hot tub to Monica, receiving a two-month, non interest-bearing note in exchange for a hot tub that normally sells for $8,000. The note is for an amount that achieves an effective interest rate of 10% per year.
1. Prepare the journal entry to record the sale.
2. Prepare any adjusting entry necessary on December 31, 2016.
3. Prepare any adjusting entry necessary on December 31, 2017.
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While Mary Corens was a student at the University of Tennessee, she borrowed $12,000 in student loans at an annual interest rate of 9.90%. If Mary repays $1,500 per year, how long (to the nearest year) will it take her to repay the loan?
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