Req. 1A | n | 3 | ||||
i | 9% | |||||
Cash flow | Amount | Present value | ||||
Interest | $34,000 | $86,064 | ||||
(850,000*4%) | (34,000*2.531294666) | |||||
Principal | $850,000 | $656,356 | ||||
(850,000*0.7721834801) | ||||||
Price of equipment | $742,420 | |||||
Req 1B | Date | General Journal | Debit | Credit | ||
jan 1 2021 | Equipment - constructed Lathe(asset) | $742,420 | ||||
Note payable | $742,420 | |||||
(850,000*4%) | ||||||
Req 2 | Cash payment | Effective Interest | Increase in balance | Oustanding bal. | ||
1 | $34,000 | $66,818 | $32,818 | $775,238 | ||
(742,420*9%) | (66,818-34,000) | (742,420+32,818) | ||||
2 | $34,000 | $69,771 | $35,771 | $811,009 | ||
(775,238*9%) | (69,771-34,000) | (775,238+35,771) | ||||
3 | $884,000 | $72,991.00 | -$811,009.00 | $0 | ||
Req 3 | Date | Account titles and explanations | Debit | Credit | ||
a | 31-Dec-21 | Interest expense | $66,818 | |||
Cash | $34,000 | |||||
Note payable | $32,818 | |||||
(Interest for first year recorded) | ||||||
31-Dec-22 | Interest expense | $69,771 | ||||
Cash | $34,000 | |||||
Note payable | $35,771 | |||||
(Interest for second year recorded) | ||||||
31-Dec-23 | Interest expense | $72,991 | ||||
Cash | $34,000 | |||||
Note payable | $38,991 | |||||
(Interest for third year recorded) | ||||||
b | 31-Dec-23 | Note payable | $850,000 | |||
Cash | $850,000 | |||||
(Note payable paid) | ||||||
Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The...
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 $800,000, 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 9% was a reasonable rate of interest. (FV of $1, PV of...
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 $850,000, three-year note that specified 4% 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 9% was a reasonable rate of interest. (EV of $1. PV of...
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 $600,000, three-year note that specified 6% 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 10% was a reasonable rate of interest. (FV of $1. PV of...
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 $850,000, three-year note that specified 4% 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 9% was a reasonable rate of interest. (FV of $1, PV of...
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 $700,000, three-year note that specified 6% 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 10% was a reasonable rate of interest. (FV of $1, PV of...
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, 2018. Amber paid for the lathe by issuing a $600,000, three-year note that specified 4% 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 12% was a reasonable rate of interest. (FV of $1, PV of...
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 $750,000, 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 9% was a reasonable rate of interest. (FV of $1, PV of...
"AFE 588 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. (EY of...
Amber Mining and Milling, Inc, contracted with Truax Corporation to have constructed a cu completed and ready for use on January 1, 2018. Amber paid for the lathe stom-made lathe. The machine was by issuing a $500,000 three-year note that specified 4% price of the lathe was unknown. It was determined by interest, payable annually on December 31 of each year. The cash market comparison with similar transactions that 8% was a reasonable rate of interest. PVAD of $) (Use...
Table factors are online. 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 $450,000, three-year note that specified 6% 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 12% was a reasonable rate of interest. (FV...