Part C is incorrect interest on notes payable 54091 c Note payable 182400 Interest on notes payable 54091 cash 182400 discount on notes payable 54091 (To record 2nd payment) Larkspur Inc has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers demand for its product Larkspur issues a(n) $912,000, 5 year, zero interest bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 11 The company will pay off the note in five $182,400 installments due at the end of each year over the life of the note a Prepare the journal entry at the date of purchase (Round factor values to 5 decimal places, e g 1 25124 and final answers to 0 decimal places, e g 5,275 Credit account titles are automatically indented when amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) Account Titles and Explanation Debit Credit equipment $674,132 discount on note payable $237,868 note payable 912000 b Prepare the journal entry at the end of the first year to record the payment and interest, assuming that the company employs the effective interest method (Round answers to 0 decimal places, e g 5,275 Credit account titles are automatically indented when amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) note payable 182400 interest on notes payable $74,154 cash 182400 discount on notes payable $74,154 c Prepare the journal entry at the end of the second year to record the payment and interest (Round answers to 0 decimal places, e g 5,275 Credit account titles are automatically indented when amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) d Assuming that the equipment had a 10 year life and no salvage value, prepare the journal entry necessary to record depreciation in the first year (Straight line depreciation is employed ) (Round answers to 0 decimal places, e g 5,275 Credit account titles are automatically indented when amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts )

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Part C is incorrect interest on notes payable 54091. c Note payable 182400 Interest on notes payable 54091 cash 182400 discount on notes payable 54091

Part C is incorrect interest on notes payable 54091.

c	Note payable	182400
	Interest on notes payable	54091
	cash		182400
	discount on notes payable		54091
	(To record 2nd payment)

Larkspur Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers demand for its product. Larkspur issues a(n) $912,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 11%. The company will pay off the note in five $182,400 installments due at the end of each year over the life of the note.

a
Prepare the journal entry at the date of purchase. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)


Account Titles and Explanation		Debit	Credit
	equipment	$674,132
	discount on note payable	$237,868
	note payable		912000


b
Prepare the journal entry at the end of the first year to record the payment and interest, assuming that the company employs the effective-interest method. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

	note payable	182400
	interest on notes payable	$74,154
	cash		182400
	discount on notes payable		$74,154


c
Prepare the journal entry at the end of the second year to record the payment and interest. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)


	d.
	Assuming that the equipment had a 10-year life and no salvage value, prepare the journal entry necessary to record depreciation in the first year. (Straight-line depreciation is employed.) (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)