Need help Coronado Corporation purchased a computer on December 31,2016, for $149,100, paying $42,600 down and agreeing to paythe balance in five equal installments of $21,300 payable eachDecember 31 beginning in 2017. An assumed interest rate of8% is implicit in the purchase price.Required:a. Prepare the journal entry at the date of purchase.b. Prepare the journal entry on December 31, 2017, to recordthe payment and interest.

Part a: Journal Entry at the Date of Purchase (December 31, 2016)Transaction Details:Purchase price…

Answered: Coronado Corporation purchased a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At the beginning of 2016, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a fouryear, noninterest-bearing note in the face amount of $8 million. The note is payable in four annual installments of $2 million at the end of each year. Required: 1. What is the effective rate of interest implicit in the agreement? 2. Prepare the journal entry to record the purchase of the machine. 3. Prepare the journal entry to record the first installment payment at December 31, 2016. 4. Prepare the journal entry to record the second installment payment at December 31, 2017. 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 11%. Prepare the journal entry to record the purchase of the machine.

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