Question
1-b. Prepare the journal entry on January 1, 2016, for Amber Mining and Millings purchase of the lathe. (If no entry is required for a
1-b.
Prepare the journal entry on January 1, 2016, for Amber Mining and Millings purchase of the lathe. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the Amber Mining and Millings purchase of the lathe.
3.
Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the interest in year 1.
Record the interest in year 2.
Record the interest in year 3.
Record the payment of the note at maturity
Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2016. Amber paid for the lathe by issuing a $700,000, three-year note that specified 6% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 10% was a reasonable rate of interest. (FV of $1, PVof$1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Complete the table below to determine the price of the equipment Table values are based on: n Cash Flow Amount Present Value Interest Principal Price of machineryStep by Step Solution
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