Answer:
1. 31 Dec	
Dr Notes receivable $261,600 
Dr Discount on notes receivable $45,401	
Cr Sales revenue $216,199
B. 31-Dec	
Dr Discount on notes receivable $21,619.9
Cr Interest revenue $21,619.9
C. Dec-31
Dr Discount on notes receivable	$23,781.1 
interest revenue $23,781.1	
Dr Cash $261,600 
Cr Notes receivable $261,600
Explanation:
A. Preparation of the journal entry to record the transaction of December 31, 2015, for the Ed Abbey Co
December 31, 2015	
Dr Notes receivable $261,600 
Dr Discount on notes receivable $45,401	
($261,600-$216,199)
Cr Sales revenue $216,199	
Computation of present value of note 
PV of $261,600 due in 2 years at 10% 
$261,600*.82645 =	$216,199
B. Preparation of the journal entry for December 31, 2016
31-Dec	
Dr Discount on notes receivable $21,619.9
[10%*$216,199] 
Cr Interest revenue $21,619.9	
C. Preparation of the journal entry for December 31, 2017
Dec-31
 Dr Discount on notes receivable	$23,781.1 
interest revenue $23,781.1	
($45,401-$21,619.9 ) 
Dr Cash $261,600 
Cr Notes receivable $261,600