Question

Check my work 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 $500,000, three-year note that specified 5 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 8% was a reasonable rate of interest. (V of $1. PV of $1. EVA of $1. PVA SLEVAD of Stand PVAD of $1) (Use appropriate factor(s) from the tables provided.) $500 Commande kot price of 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. Complete this question by entering your answers in the tabs below. Req1A Red Reg 2 Reg 3 Complete the table below to determine the price of the equipment. (Round final answers to the nearest whole dollar) Table values are based on: Amount Present Value Cash Flow Interest Principal Price of equipment Reg 10 >

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Answer 1

Answer Noter Payable If anyone who has less quail q6ilby of cash for the purchase of some quet then he an sigh a notes peyable from the sellen of such asset Notes Payable helps to tylfill the cash requirement of befyer. Payment of Notes Payable will be made in future. Interest also given by buyer to sellow for yre of such as sel.

year hell completion of table to Jelena.ne_the_price__of_the equipment price of the equipment is equal to the present value of principy plus the present value of principal at the end of 3 0 Interest = S 500000 x 5% = 25000 I Table values are based on ņ : 3 years 8% pq cash flow In tekeesti Principal | Amount | PV factor @ 8% L | 25000 E (1.08)" ] = 2.577| 500000 [13 01.0899=0.7938 Present Value 64427 396916 Ajre of the Equipment (46)343 Jovana! Ey by on January | 2014 Inc. Purchase of lathea for Ambev Miglag 6 miling's سلام Ambew signed a Jober payable for purchase of lythe such Noter payable is true on discount qs face value of A noter payable is greger than the price of the equipment. The Having Entry for such 699 section is ac fellow's Amber m19109 de millings Inc Joyrney Enny Credit ($1 Date Parljulars I bebius || Jan. 1 porsl Epustoment Ale - In 46/343 Loiscount on Notes payable Ale L. To Noter payable Ale (Being to record purchase of equipment with I notes payable : 38657 50000 L

Amor/1441109 schedule for _q_3 year term of Jobe restrictions 2 As discurred earlie, company has got holes payable on discount There discount should have to amorlized each year and added to tie price of equipment. It is calepleted of amoufl. of ngonable rate of inbewest Lelystaigloves on_gole) 2949b6cm Year I Cash Paument @j Out sighting Balance Effective inwegue in I interest (5 lakhxs: Balance C = (51946x52 0 = B-C 36907 21000 11907 E : t +D. 1 461343 473250 486 110 500000 37860 14866 25000 25000 38889 13889 E': Outstanding balance of equipment cauljen cebheal yon. Joging Embles to record inteweit for each theree yegas_99d payments of I note at molylly Amber Minigy Mill 25. IIC Joyilal Enbicu - I Date Date Credi$7 25000 Debir ($) Av. 36903 Dec 3|2001 Interest Expense Alc - To Cash Ale To Discount on Notes payable Ale being to record interest expense for yoqul and 1 11907 اولاد ابهام و اطرmaو

25000 Hoes 31,20 Interfit expense Ale Dr. 37560 To Cash Alo To ojcount on Notes Payable Ne Being to record inlevert expenre on I second year and amoiliation of count) 12860 Deadli 2-3000 Inkuest Expenli Alis a Del 38389 To Cash Ale Discount on Notes_Pangben (Being to recort inlevert expenie on thluta . 40L_27267296709 of visceral) 1388 kablis Dr Sooooo Note Petable Alan - To Cast Ne Beeling to second parent of note...pegeble.) SO 002 6130 Total 1613656.