The government issued a 5 year zero-interest note dated January 1, 2018 with a face value of

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Question:

The government issued a 5 year zero-interest note dated January 1, 2018 with a face value of 150,000 to help finance the construction of a building for Buffalo Industries. The market rate of interest is 4% and the effective interest method of amortization is used.

Required:

Prepare the journal entry for the issue of the bond.