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Exercise 10-14 (Part Level Submission) Flounder 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. Flounder issues a(n) $928,000, 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 $185,600 installments due at the end of each year over the life of the note. (a) Your answer is correct. Prepare the journal entry at the date of purchase. (Round factor values to 5 decima 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 title and enter o for the amounts.) Account Titles and Explanation Debit Credit Equipment | 685,960 Discount on Notes Payable 1 242,040 JU Notes Payable ble 928,000 (b) Your answer is correct. 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 O 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 o for the amounts.) Account Titles and Explanation Credit Debit - 185,600 Notes Payable Tinterest Expense 75,455 Discount on Notes Payable 75,455 Cash 185,600 (c) Your answer is correct. 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 o for the amounts.) Account Titles and Explanation Debit Credit Notes Payable 185,600 Tinterest Expense 63,340 Discount on Notes Payable 63,340 Cash 185,600 (d) x Your answer is incorrect. Try again. 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.) Account Titles and Explanation Debit Credit