Sheffield Inc. has decided to purchase equipment from Central Michigan Industries on January $2,2025,$ to expand its production capacity to meet customers' demand for its product. Sheffield issues an $$590,000,5-$year, zero$-$interest$-$bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is $7\%.$ The company will pay off the note in five $$118,000$ installments due at the end of each year over the life of the note.

$($a$)$

Prepare the journal entry at the date of purchase. $($Round factor values to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answers to $0$ decimal places, e$.$g$.5,275.$ Credit account titles are automatically indented when 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. List all debit entries before credit entries.$)$

Account Titles and Explanation

Debit

Credit

$$

$$

$$

$$

$$

$$

$($b$)$

Prepare the journal entry at the end of the first year to record the payment and interest, assuming that the company employs the effective$-$interest method. $($Round answers to $0$ decimal places, eg$.5,275.$ Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.$)$