On January 1,WildhorseCorporation issues a $160,000, 10-year non-interest-bearing note to Camden Production for new machinery. The market interest rate is8% and Camden is to pay $16,000instalments at the end of each year. Fair value for a purchase of the new machinery in cash is not available from the supplier at this time.

Calculate the purchase price using any of the three methods (tables, financial calculator, or Excel).

Purchase price=

Prepare the journal entry to record the machinery purchase. There is just one entry to be done

Account Title Debit Credit

January 1

Record the journal entry for the first instalment payment on the note on Dec. 31

Account Titles Debit Credit

December 31

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