Exercise 14-17 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, 2018 Amber paid for the lathe by Issuing a $550,000, three-year note that specified 5% 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 9% was a reasonable rate of interest. (FV or $1. PV OF SLEVA Of $1. PVA of $1. FVAD or $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, 2018, 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. Reg 1A Reg 10 Reg 2 Reg 3 equipment. (Round final answers to the nearest whole dollar) Complete the table below to determine the price of Table values are based on Present Val Cash Flow Amount Interest Principal Price of equipment Reg 1B > ament 2 Saved 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 Prepare the journal entry on January 1, 2018, for Amber Mining and Milling's purchase of the lathe. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollar.) View transaction list Journal entry worksheet Record the Amber Mining and Milling's purchase of the lathe. Note: Enter debits before credits Date General Journal Debit Credit January 01, 2018 1-b. Prepare the journal entry on January 1, 2018, 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 IA Reg 1B Reg 2 Req3 Prepare an amortization schedule for the three-year term of the note. (Round final answers to the nearest whole dollar.) Cash Payment Effective Interest Increase in Balance Outstanding Balance Total 2. Prepare an amortization schedule for the three year term of the note 3. Prepare the joumal 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 Req 18 Reg 2 Reg 3 Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Round final answers to the nearest whole dollar) View transaction list Journal entry worksheet 2 3 4 Record the interest in year 1. Note: Enter debits before credits Debit Credit
