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Amber Mining and Milling, Incorporated, contracted with Truax Corporation to have constructed a custom-made lathe....

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Accounting

Amber Mining and Milling, Incorporated, contracted with Truax Corporation to have constructed a custom-made lathe.
The machine was completed and ready for use on January 1,2024.
Amber paid for the lathe by issuing a $800,000, 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 11% was a reasonable rate of interest.
Required:
1-a. Complete the table below to determine the price of the equipment.
1-b. Prepare the journal entry on January 1,2024, for Amber Mining and Millings 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.

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