b) Prepare the journal entry at the end of the first year to record the payment and interest.

c) Prepare the journal entry at the end of the second year to record the payment and interest.

Pearl Limited has been experiencing increased customer demand for its specialty food products. To meet this demand, the company has bought additional refrigeration units to hold more inventory. To finance this purchase, Pearl issued a four-year non-interestbearing note, with a face value of $760,000. The prevailing interest rate for similar instruments is 11%. The company agreed to repay the note in four equal instalments. Pearl used the effective interest method to amortize any premium or discount. the factor table PRESENT VALUE OF 1. the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Your answer is partially correct. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entry at the date of purchase. (Hint: Refer to Chapter 3 for tips on calculating.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.)