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Pearl Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2020,...

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Accounting

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Pearl Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2020, to expand its production capacity to meet customers' demand for its product. Pearl issues a(n) $400,000,5-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 12%. The company will pay off the note in five $80.000 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 foctor values to 5 decimal ploces, eg. 1.25124 and final answers to 0 decimal places, eg. 5.275. Credit occount 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 Ofor the amounts.)

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