On January 1, 2020, Pronghorn Company makes the two following acquisitions.1. Purchases land having a fair market value of $220,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $323,252.2. Purchases equipment by issuing a 5%, 8-year promissory note having a maturity value of $350,000 (interest payable annually). The company has to pay 8% interest for funds from its bank.(a)Record the two journal entries that should be recorded by Pronghorn Company for the two purchases on January 1, 2020.(b) Record the interest at the end of the first year on both notes using the effective-interest method.(Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places eg. 58,971. If no entry isrequired, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount isentered. Do not indent manually.)lo.DateAccount Titles and ExplanationDebitCrei1) 1.January 1, 20202.January 1, 2020) 1. December 31, 20202. December 31, 2020

A journal entry is a form of accounting entry that is used to report a business transaction in a…

Answered: On January 1, 2020, Pronghorn Company…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...

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On January 1, 2020, Pronghorn Company makes the two following acquisitions.

1.		Purchases land having a fair market value of $220,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $323,252.
2.		Purchases equipment by issuing a 5%, 8-year promissory note having a maturity value of $350,000 (interest payable annually).

The company has to pay 8% interest for funds from its bank.
(a)
Record the two journal entries that should be recorded by Pronghorn Company for the two purchases on January 1, 2020.
(b) Record the interest at the end of the first year on both notes using the effective-interest method.
(Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places eg. 58,971. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
lo.
Date
Account Titles and Explanation
Debit
Crei
1) 1.
January 1, 2020
2.
January 1, 2020
) 1. December 31, 2020
2. December 31, 2020

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