On December 31, 2017, Headland Company acquired a computer from Plato Corporation by issuing a $542,000 zero-interest-bearing note, payable in full on December 31, 2021. Headland Companys credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $64,000 salvage value.

1) Prepare the journal entry for the purchase on December 31, 2017

2) Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2018.

Schedule of Note Discount Amortization

Date Debit, Interest Expense Credit, Discount on Notes Payable Carrying Amount of Note

12/31/17 $ $

12/31/18

12/31/19

12/31/20

12/31/21

3)Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2019