Cardinals Corporation purchased a computer on December 31, 2013, for $105,000, paying $30,000 down and agreeing to

Question:

Cardinals purchased a computer on December 31, 2013, for $105,000, paying $30,000 down and agreeing to pay the balance in five equal installments of $15,000 payable each December 31 beginning in 2014. An assumed interest rate of 10% is implicit in the purchase price.

Instructions
(a) Prepare the journal entry(ies) at the date of purchase.
(b) Prepare the journal entry(ies) at December 31, 2014, to record the payment and interest (effective interest method employed).
(c) Prepare the journal entry(ies) at December 31, 2015, to record the payment and interest (effective interest method employed).

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...