On January 1, 2017, Pronghorn Company issued a $1,216,200, 5-year, zero-interest-bearing note to Stellar Bank. The note was issued to yield 10% annual interest. Unfortunately, during 2018 Pronghorn fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2018, Stellar Bank decided that the loan was impaired. Pronghorn will probably pay back only $810,800 of the principal at maturity.
Collapse question part
(a) Prepare journal entries for both Pronghorn Company and Stellar Bank to record the issuance of the note on January 1, 2017. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)