Blossom Inc. decided to purchase equipment from Central Ontario Industries on January 2, 2020, to expand its production capacity to meet customers demand for its product. Blossom issued a $861,000, 6-year, noninterest-bearing note to Central Ontario for the new equipment when the prevailing market interest rate for obligations of this nature was 10%. The company will pay off the note in 6 $143,500 instalments due at the end of each year of the notes life. (The tables in this problem are to be used as a reference for this problem.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

Prepare the journal entry at the date of purchase. Calculate the purchase price using any of the three methods (tables, financial calculator, or Excel). (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. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2020	enter an account	enter an amount	enter an amount
	enter an account	enter an amount	enter an amount

Prepare the journal entries at the end of the first year to record the payment of principal and interest, assuming that the company uses the effective interest method. (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. Round final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020	enter an account
	enter an account
Jan. 2, 2021	enter an account
	enter an account
	enter an account

Prepare the journal entries at the end of the second year to record the payment of principal and interest. (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. Round final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2021	enter an account
	enter an account
Jan. 2, 2022	enter an account
	enter an account
	enter an account

Assuming that the equipment has an 8-year life and no residual value, prepare the journal entry that is needed to record depreciation in the first year. (The straight-line method is used.) (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. Round final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020	enter an account
	enter an account