Flounder Incorporated provides solar energy services to Toronto. Flounder needed to buy additional solar energy panels to meet the demand for its energy product. The Government of Ontario offered an interest-free forgivable loan to Flounder in the amount of $600,000. The loan will be forgiven if Flounder is able to produce a stated number of kilowatts of energy per year for the next five years. If these conditions are not met, the amount is due to the government in full in five years. Flounder believes it will be able to meet the conditions. Flounder recently obtained a similar loan from the bank with an annual interest rate of 7%. 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.

Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the loan and prepare an amortization table for the loan using the effective interest method. Present the first three years of the loan. (Hint: Refer to Chapter 3 for tips on calculating. For the amortization table, use the amount arrived at using factor tables.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)

Schedule of Note Discount Amortization
Date		Debit, Interest Expense Credit, Notes Payable		Carrying Amount of Note
12/31/20				$
12/31/21		$
12/31/22
12/31/23

eTextbook and Media

List of Accounts

Prepare the entry on December 31, 2020, to record the interest-free loan. (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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)

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

eTextbook and Media

List of Accounts

Prepare any adjusting journal entry that is necessary at December 31, 2021, the companys fiscal year end. (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.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2021