1. On January 1, Snipes Construction paid for earth-moving equipment by issuing a $460,000, 5-year note that specified 3% interest to be paid on December 31 of each year. The equipments retail cash price was unknown, but it was determined that a reasonable interest rate was 6%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) At what amount should Snipes record the equipment and the note? What journal entry should it record for the transaction?

2.

On January 1, a company borrowed cash by issuing a $430,000, 4%, installment note to be paid in three equal payments at the end of each year beginning December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

What would be the amount of each installment? Prepare an amortization table for the installment note. Prepare the journal entry for the second installment payment.