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, 2021. Amber paid for the lathe by issuing a $500,000, three-year note that specified 4% 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 8% was a reasonable rate of interest. (FV of $1, PV of $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. 1-b. Prepare the journal entry on January 1, 2021, for Amber Mining and Milling's purchase of the lathe. 2. Prepare an amortization schedule for the three-year term of the note. 3. Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Reg 3 Complete the table below to determine the price of the equipment. (Round final answers to the nearest whole dollar.) X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Req3 Complete the table below to determine the price of the equipment. (Round final answers to the nearest whole dollar.) Table values are based on: n = 3 i = 10.0% Cash Flow Amount Present Value 49,737 X Interest $ 20,000 Principal $ 500,000 Price of equipment 375,655 X 425,392 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Reg 3 Prepare an amortization schedule for the three-year term of the note. (Round intermediate calculations and final answers the nearest whole dollar.) Cash Payment Effective Interest Increase in Balance Outstanding Balance $ 1 $ $ 35,877 $ 15,877 488,457 464,334 481,481 500,000 2 20,000 20,000 20,000 60,000 37,147 3 38,519 111,543 17,147 18,519 51,543 Total $ $ $ Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity. (I entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar.) No Event General Journal Debit Credit 1 1 Interest expense 35,877 Discount on notes payable 15,876 Cash 200,000 2 2 Interest expense 37,146 Discount on notes payable 18,518 200,000 Cash 3 3 Interest expense 38,518 Discount on notes payable 18,518 200,000 X Cash 4 4 Interest expense 38,518 X Discount on notes payable 18,518 200,000 Cash
