Exercise 14-17 (Static) 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 $600,000, 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 12% was a reasonable rate of interest. (EV of $1. PV of S1. EVA of \$1. PVA of $1. EVAD of \$1 and PVAD of \$1) (Use appropriate factor(5) from the tables provided.) Required: 1.o. Complete the table below to determine the pilce 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. Complete the table below to determine the price of the equipment. (Round final answers Journal entry worksheet Record the Amber Mining and Milling's purchase of the lathe. Note: Enter debits before credits. Prepare an amortization schedule for the three-year term of the note. (Round intermediate calculations and final answers to the nearest whole dollars.) Journal entry worksheet 4 Exercise 14-17 (Static) 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 $600,000, 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 12% was a reasonable rate of interest. (EV of $1. PV of S1. EVA of \$1. PVA of $1. EVAD of \$1 and PVAD of \$1) (Use appropriate factor(5) from the tables provided.) Required: 1.o. Complete the table below to determine the pilce 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. Complete the table below to determine the price of the equipment. (Round final answers Journal entry worksheet Record the Amber Mining and Milling's purchase of the lathe. Note: Enter debits before credits. Prepare an amortization schedule for the three-year term of the note. (Round intermediate calculations and final answers to the nearest whole dollars.) Journal entry worksheet 4
