Exercise 10-14 (Part Level Submission) Wildhorse Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2020, to expand its production capacity to meet customers' demand for its product. Wildhorse issues ain) $720,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The company will pay off the note in five $144,000 installments due at the end of each year over the life of the note. v (a) Your answer is correct. Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, eg. 1.25124 and final answers to o decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account tities and enter o for the amounts.) Debit Credit Account Titles and Explanation Equipment $519,088 Discount on Notes Payable $200,912 Notes Payable $720,000 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Attempts: 2 of 5 used Your answer is correct. . Prepare the journal entry at the end of the first year to record the payment and interest, assuming that the company employs the effective-interest method. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) . Account Titles and Explanation Debit Credit Interest Expense $62,291 Notes Payable $144,000 Discount on Notes Paya $62,291 Cash $144,000 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Attempts: 2 of 5 used (c) Your answer is correct. Prepare the journal entry at the end of the second year to record the payment and interest. (Round answers to o decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Interest Expense $52,485 Notes Payable $144,000 Discount on Notes Paya $$52,485 Cash $144,000 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT (d) Assuming that the equipment had a 10-year life and no salvage value, prepare the journal entry necessary to record depreciation in the first year. (Straight-line depreciation is employed.) (Round answers to o decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS
