Exercise 14-17 (Algo) Note with unrealistic interest rate; borrower; amortization schedule [LO14-3] 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 $700,000, three-year note that specified 6% 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 10% was a reasonable rate of interest. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD 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. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 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: Present Value Cash Flow Amount Interest Principal Price of equipment Res 18 > Amber Mining and Milling, Inc., contracted with Truax Corporation to have con completed and ready for use on January 1, 2021. Amber paid for the lathe by is Interest, payable annually on December 31 of each year. The cash market price comparison with similar transactions that 10% was a reasonable rate of interest 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 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 at Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Reg 2 Reg 3 Prepare an amortization schedule for the three-year term of the note. (Round Intern the nearest whole dollar.) Cash Payment Effective Interest Increase in Balance Outstanding Balance Reg 13 Req3 > Prev 1 of 4 require 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 latt 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 Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Prepare the journal entries to record (a) Interest for each of the three years and (b) payment of the note required for a transaction/event, select "No journal entry required" in the first account field. Round inter answers to the nearest whole dollar.) View transaction list Journal entry worksheet Record the interest in year 1. Note: Enter debits before credits. Event General Journal Debit Credit / 1 / / / 1 / 1 Prey 1 of 4 !!! Next >
