Braxton Technologies, Inc. constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 2016. A&G paid for the conveyor by issuing a $100,000, four-year bond that specified 5% interest to be paid on December 31 of each year, and the bond is to be repaid at the end of four years. The conveyor was custom-built for A&G, so its cash price was unknown. By comparison with similar transactions, it was determined that a reasonable interest rate was 10%. Required: 1. Prepare the journal entry for A&G's purchase of the conveyor on January 1, 2016. 2. Prepare an amortization schedule for the four-year term of the note. 3. Prepare the journal entry for A&G's third interest payment on December 31, 2018
Braxton Technologies, Inc. constructed a conveyor for A&G Warehousers that was completed and ready for use on January 1, 2016. A&G paid for the conveyor by issuing a $100,000, four-year bond that specified 5% interest to be paid on December 31 of each year, and the bond is to be repaid at the end of four years. The conveyor was custom-built for A&G, so its cash price was unknown. By comparison with similar transactions, it was determined that a reasonable interest rate was 10%.
Required:
1. Prepare the
2. Prepare an amortization schedule for the four-year term of the note.
3. Prepare the journal entry for A&G's third interest payment on December 31, 2018
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