On July 1, 2021, Markwell Company acquired equipment. Markwell paid $177,500 in cash on July 1, 2021, and signed a $710,000 noninterest-bearing note for the remaining balance which is due on July 1, 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 be included in the journal entry on July 1, 2021? (Round intermediate and final answer to nearest whole dollar amount.)

Multiple Choice

• Credit: Notes payable, $669,814.

• Debit: Equipment, $887,500.

• Debit: Discount on notes payable, $40,186.

• Credit: Notes payable, $669,814 and Debit: Discount on notes payable, $40,186.

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