On January 1, 2020, Sunland Limited issued a $1,344,000, 5-year, zero-interest-bearing note to Northern Savings Bank. The note was issued to yield 9% annual interest. Unfortunately, during 2020 Sunland fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2020, Northern Savings Bank decided that the loan was impaired and that there was a significant change in credit risk. Sunland will probably pay back only $896,000 of the principal at maturity. For simplicity, assume that this reflects the probability-weighted amount. Both Sunland and Northern Savings Bank prepare financial statements in accordance with IFRS 9.

Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare journal entries for both Sunland and Northern Savings Bank to record the issuance of the note on January 1, 2020. Use the result from the financial calculator or Excel function PV.

Date Debit Credit Account Titles and Explanation Sunland Limited: January 1, 2020 Cash Notes Payable Northern Savings Bank: 7 January 1, 2020 Notes Receivable i x Cash