M9-12 (Algo) Computing Present Values and Recording Long-Term Liabilities LO9-8

MoonShine Company signed a note for $55,000 to purchase a new piece of equipment. MoonShine will pay back the $55,000 at the end of two years along with any accrued interest. The annual interest rate on the loan is 5%.

Required:

1. Compute the present value of this long-term liability. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your answer to nearest whole dollar.)

2. Prepare the journal entry MoonShine will record on the day it purchases the piece of equipment and signs the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answer to nearest whole dollar.)