Baddour Inc. purchased equipment on February 15, 2021. Baddour paid $200,000 in cash on February 15, 2021, and signed a $800,000 noninterest-bearing note for the remaining balance which is due on February 15, 2022. An interest rate of 6% reflects the time value of money for this type of loan agreement. (PV of $1, PVA of $1) (Use appropriate factor(s) from the tables provided.) Which of the following should Baddour include in the journal entry on February 15, 2021? (Round intermediate and final answer to nearest whole dollar amount.)

Multiple Choice

Debit: Equipment, $1,000,000.

Credit: Notes payable, $754,720 and Debit:

Discount on notes payable, $45,280. Credit:

Notes payable, $754,720. Debit: Discount on notes payable, $45,280