On January 1, 2021, Riser Farm Company purchased a new combine from Riland Equipment at a cost of $675,000 plus sales tax of 2.0%. The dealer also charges $7,500 to deliver the combine and $11,000 to assemble it. these charges are not subject to sales tax. Riser spent another $12,500 to modify a vehicle storage barn to accommodate the combine.

To pay for the combine and the related costs, Riser gave Riland :

-Two old combines for which it had paid a total of $900,000 15 years ago. Riser was depreciating the combines over 20 years to a combined salvage value of $100,000.

-A note payable in the amount of $350,000. The note amortizes over 60 months and bears an annual interest rate of 4.8%.

-$100,000 in cash.

1. Prepare in good form the journal entry to record combine purchase/disposal transaction.