Interest bearing and non interest bearing notes

If A sold good worh $32000 to B

B is not able to pay on due date 09/30/2007

B signed a Interest bearing note for $35000.00 for 8% interst. due on Dec 2007

my enteries are

Notes receivable 35000.00
Accts receivable 35000.00

Int Receivable 700.00
Int Revenue 700.00

On Dec 2007

Cash 35700.00
Int receivable 35700.00

Now my question is

Co A sold goods worth of only 32000.00 but signed Notes for 35000.00 + Int
Ie co A received 35700.00 against goods sold for 32000.00, the diff between 35700-32000
3700.00 should reflect as gain or what or does not effect any account.