Holly Springs, Inc. contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2018. Holly Springs paid for the lathe by issuing a $400,000 note due in three years. Interest, specified at 4%, was 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 for which 8% was a reasonable rate of interest. Holly Springs uses the effective interest method of amortization. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided. Round your intermediate and final answers to the nearest whole dollar) k Required: 1. Prepare the journal entry on January 1, 2018, for Holly Springs' 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. Required 1 Required 2 Required 3 Prepare the journal entry on January 1, 2018, for Holly Springs purchase of the lathe. (If no entry is required for a transaction/ex select "No journal entry required in the first account field.) View transaction list View journal entry worksheet No Debit Credit 1 Date General Journal January 01, 2018 Machinery Discount on notes payable Notes payable 400,000 Required 2 > Holly Springs, Inc. contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2018. Holly Springs paid for the lathe by issuing a $400,000 note due in three years. Interest, specified at 4%, was 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 for which 8% was a reasonable rate of interest. Holly Springs uses the effective interest method of amortization. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your intermediate and final answers to the nearest whole dollar.) Required: 1. Prepare the journal entry on January 1, 2018, for Holly Springs' purchase of the lathe. 2. Prepare an amortization schedule for the three-year term of the note. 3. Prepare the journal entries to record () 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. Required 1 Required 2 Required 3 Prepare an amortization schedule for the three-year term of the note. Year Cash Payments Effective Interest Increase in Balance Outstanding Balance 1 2 3 0 Holly Springs, Inc. contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2018. Holly Springs paid for the lathe by issuing a $400,000 note due in three years. Interest, specified at 4%, was 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 for which 8% was a reasonable rate of interest. Holly Springs uses the effective interest method of amortization. (FV of $1. PV of $1. EVA of $1. PVA of S1, EVAD of $1 and PVAD of $(Use appropriate factor() from the tables provided. Round your intermediate and final answers to the nearest whole dollar) Required: 1. Prepare the journal entry on January 1 2018, for Holly Springs 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. Required 1 Required 2 Recured 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 required for a transaction/event, select "No journal entry required in the first account field.) View transaction ist View journal entry worksheet No General Journal IN Transcation 3-1 Debit 16.000 1 Interest expense Cash 16,000 IN 2 a-2 Interest expense Cash 16,000 16.000 3 Interest expense Cash 16,000 16.000 4 451,942 Notes payable Cash 451,1142
