On January 1, 1990, Technic Company gave its own \(\$ 500,000\) noninterest-bearing, six-year note payable in exchange for a machine, the cash price of which was not readily determinable. The market rate for interest on such notes on the day of the exchange was \(9 \%\) annually.

\section*{Required}

(Round all amounts in your answers to the nearest whole dollar.)

1. Prepare a form with the following column headings and calculate and fill in the required amounts for the six years the note is outstanding.

2. Prepare general journal entries to record:

(a) the acquisition of the machine,

(b) the discount amortized at the end of each of the first three years, and

(c) the payment of the note on January 1, 1996.
3. Show how the note should appear on the December 31, 1992, balance sheet.

Transcribed Image Text:

Year Beginning-of- Year Carrying Amount Discount to Be Amortized Each Year Unamortized Discount at End of Year End-of-Year Carrying Amount