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American Food Services, Incorporated, acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024.
American Food Services, Incorporated, acquired a packaging machine from Barton and Barton Corporation.
- Barton and Barton completed construction of the machine on January 1, 2024.
- In payment for the $4.9 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year.
- The payments include interest at the rate of 12%.
Required:
- Prepare the journal entry for American Food Services purchase of the machine on January 1, 2024.
- Prepare an amortization schedule for the four-year term of the installment note.
- Prepare the journal entry for the first installment payment on December 31, 2024.
- Prepare the journal entry for the third installment payment on December 31, 2026.
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