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Wildhorse Corporation purchased a computer on December 31, 2016, for $138,600, paying $39,600 down and agreeing to pay the balance in five equal installments of
Wildhorse Corporation purchased a computer on December 31, 2016, for $138,600, paying $39,600 down and agreeing to pay the balance in five equal installments of $19,800 payable each December 31 beginning in 2017. An assumed interest rate of 9% is implicit in the purchase price.
- Prepare the journal entry at the date of purchase.
- Prepare the journal entry at December 31, 2017, to record the payment and interest (effective-interest method employed).
- Prepare the journal entry at December 31, 2018, to record the payment and interest (effective-interest method employed).
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