ACTIVITY 3

On January 2, 2012, AAEE Corporation purchased equipment by signing a noninterest-bearing note requiring $50,000 to be paid on December 31, 2013. The prevailing market rate of interest on notes of this nature is 6%. The equipment is assigned a 5 year expected useful life with a $2,500 salvage value and depreciation is recorded straight-line.

Required: What is the entry to record the acquisition?