Thompson Limited, a private company with no published credit rating, completed several transactions during 2020. In January, the company bought under contract a machine at a total price of $1.26 million. It is payable over five years with instalments of $252,000 per year, with the first payment due January 1, 2020. The seller considered the transaction to be an instalment sale with the title transferring to Thompson at the time of the final payment. If the company had paid cash for the machine at the time of the sale, the machine would have cost $1,100,000. The company could have borrowed from the bank to buy the machine at an interest rate of 7%. It is expected that the machine will last 10 years. On July 1, 2020, Thompson issued $10.50 million of bonds priced at 99 with a coupon of 10% payable July 1 and January 1 of each of the next 10 years to a small group of large institutional investors. As a result, the bonds are closely held. The July 1 interest was paid and on December 30 the company transferred $525,000 to the trustee, Holly Trust Limited, for payment of the January 1, 2021 interest. Thompson purchased $525,000 (face value) of its 6% convertible bonds for $477,750. It expects to resell the bonds at a later date to a small group of private investors. Finally, due to economic conditions, Thompson obtained some government financing to help buy some updated technology to be used in the plant. The government provided a $525,000 loan with an interest rate of 1% on December 31, 2020. The company must repay $525,000 in five years: December 31, 2025. Interest payments of $5,250 are due for the next five years, starting on December 31, 2021. The company could have borrowed a similar amount of funds for an interest rate of 6% on December 31, 2020. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a1) As Thompsons accountant, using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the note and prepare journal entries for the machine purchase and the government loan transactions described above. (Hint: Refer to Chapter 3 for tips on calculating and use the calculations arrived at from the time value of money tables for the journal entry.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the 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.)

Date	Account Titles and Explanation	Debit	Credit
Jan.1
Dec. 31
	(Record the government funding)