A company buys a piece of equipment at a cost of $36,000, makes a down payment of $6,000, and signs a three-year promissory note for the remaining $30,000. The company will make three equal annual payments, beginning one year after the equipment is purchased. The interest rate that the company will pay is 10%.

a. Calculate the annual payment required for this promissory note.

b. Make the journal entry to record the third and last payment.

2. Refer to the previous exercise. Suppose the company paid the $6,000 up front, signed a three-year promissory note, paying $11,000 per year, and determined the true value of the equipment to be $31,000.

a. Calculate the interest rate implicit in this note.

b. Make the journal entry to record the third and last payment.