Amber Mining and Milling, Incorporated, contracted with Truax Corporation to have constructed a custommade lathe.
The machine was completed and ready for use on January
Amber paid for the lathe by issuing a $ threeyear note that specified interest, payable annually on December of each year.
The cash market price of the lathe was unknown.
It was determined by comparison with similar transactions that was a reasonable rate of interest.
Required:
a Complete the table below to determine the price of the equipment.
b Prepare the journal entry on January for Amber Mining and Milling's purchase of the lathe.
Prepare an amortization schedule for the threeyear term of the note.
Prepare the journal entries to record a interest for each of the three years and b payment of the note at maturity.
Note: Use tables, Excel, or a financial calculator. FV of $ PV of $ FVA of $ PVA of $ FVAD of $ and PVAD of $
