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Exercise 14-17 (Algo) Note with unrealistic interest rate; borrower; amortization schedule [LO14-3] Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Amber paid for the lathe by issuing a $850,000, three-year note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 9% was a reasonable rate of interest. (FV of $1. PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) eBook Required: 1-a. Complete the table below to determine the price of the equipment. 1-b. Prepare the journal entry on January 1, 2021, for Amber Mining and Milling's purchase of the lathe. 2. Prepare an amortization schedule for the three-year term of the note. 3. Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity. Hint Ask Complete this question by entering your answers in the tabs below. Print Req 1A Req 1B Reg 2 Reg 2 Reg 3 Reg 3 Ferences Complete the table below to determine the price of the equipment. (Round final answers to the nearest whole dollar.) Table values are based on: Present Value Cash Flow Amount Interest Principal Price of equipment Req 1A 1 Reg 1B Reg 1B | Reaz Reg 2 Reg 3 Rega Prepare the journal entry on January 1, 2021, for Amber Mining and Milling's purchase of the lathe. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar.) View transaction list Journal entry worksheet Record the Amber Mining and Milling's purchase of the lathe. Note: Enter debits before credits. General Journal Debit Credit Date January 01, 2021 Record entry Clear entry View general journal Reg 1A Reg 1B Reg 2 Reg 3 Prepare an amortization schedule for the three-year term of the note. (Round intermediate calculations and final answers to the nearest whole dollar.) Cash Payment Effective Interest Increase in Balance Outstanding Balance 1 2 3 Total Req 1A Req IA REG 18 Reg 2 Reaz Reg 1B | Rea3 ] Reg 3 Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar.) View transaction list Journal entry worksheet Record the interest in year 1. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal
