Highlight Company purchases the right to use a piece of music from the original musician who created it. Officials hope to make this music the companys signature song. Therefore, the contract (which is signed on January 1, Year One) is for four years. The agreed upon price is $800,000, with no stated interest rate to be paid. Highlight could borrow this amount of money at a 5 percent annual interest rate at the current time. The arrangement states that Highlight will make this $800,000 payment on December 31, Year Four.

a. Record the journal entry for Highlight for the acquisition of this copyright on January 1, Year One.

b. Record the adjusting entries to recognize interest expense and amortization expense on

December 31 of each of the subsequent four years.

c. Record the journal entry for the payment of the $800,000 on December 31, Year Four.