Homework Answers
purchase price of the machine will be the present value of payments:
A*[1-(1+r)^(-n)]/r
here,
A = 15,000.
r=8%.=>0.08.
n=10.
=>15,000*[1-(1.08)^(-10)]/0.08
=>15,000*6.71008125
=>$100,651.22.
the following will be the journal entry on the date of purchase:
| sno | accounts | debit | credit |
| 1 | equipment a/c | 100,651.22 | |
| . | .......To notes payable a/c | 100,651.22 | |
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