On January 1, 2025, Skysong Company issued a $1,257,600,5-year, zero-interest-bearing note to Concord Bank. The...
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On January 1, 2025, Skysong Company issued a $1,257,600,5-year, zero-interest-bearing note to Concord Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2026 Skysong fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2026, Concord Bank decided that the loan was impaired. Skysong will probably pay back only $838,400 of the principal at maturity. (a) Prepare journal entries for both Skysong Company and Concord Bank to record the issuance of the note on January 1,2025. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 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 O for the amounts. List all debit entries before credit entries.)
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