The government lent $200,000 to Sweet Industries, who signed a 5-year, zero-interest note dated January 1, 2021 to help finance the construction of a building. The market rate of interest is 4% and the effective interest method of amortization is used. The loan will be forgiven if Sweet provides employment for a specified number of individuals for a specified period of time. If these conditions are not met, the amount is due to the government in full in five years. Sweet believes it will be able to meet the conditions.

Your answer is partially correct. Prepare the journal entry for the issue of the note on the books of Sweet. (Round answer to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Date January 1 Cash 164386 Notes Payable 164386 e Textbook and Media