Sweet Acacia Limited has been experiencing increased customer demand for its specialty food products. To meet this deman

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Sweet Acacia Limited has been experiencing increased
customer demand for its specialty food products. To meet this
demand, the company has bought additional refrigeration units to
hold more inventory. To finance this purchase, Sweet
Acacia issued a four-year non–interest-bearing note, with a
face value of $1,000,000. The prevailing interest rate for similar
instruments is 11%. The company agreed to repay the note in
four equal instalments. Sweet Acacia used the effective
interest method to amortize any premium or discount.

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.
Part 1
Partially correct answer icon
Your answer is partially correct.
Using (1) factor tables, (2) a financial calculator, or (3)
Excel function PV, prepare the journal entry at the date of
purchase. (Hint: Refer to Chapter 3 for tips on
calculating.) (For calculation purposes, use 5
decimal places as displayed in the factor table provided and
round 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.)
Account Titles and Explanation
Debit
Credit