Question

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
please show all work.

Answer 1

(d)

Annual depreciation expense = Cost of equipment / Useful life

= 685,960/10

= $68,596

Account Titles and Explanation	Debit	Credit
Depreciation expense	68,596
Accumulated depreciation - Equipment		68,596

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