Hornet Motors purchased a custom-made metal press for use in repairing wrecked cars. The press was installed on January 2, 2018. The press had a market value of $300,000. Hornet agreed to pay for the press in three equal installments beginning December 31, 2018. At the time, Hornet's incremental borrowing rate was 7%. Required: Compute the installment payments and prepare the three-year amortization table for the note payable. Prepare the journal entries to record the purchase of the machine, the first annual payment, and the final payment on the note. Answer:
Hornet Motors purchased a custom-made metal press for use in repairing wrecked cars. The press was installed on January 2, 2018. The press had a market value of $300,000. Hornet agreed to pay for the press in three equal installments beginning December 31, 2018. At the time, Hornet's incremental borrowing rate was 7%. Required: Compute the installment payments and prepare the three-year amortization table for the note payable. Prepare the journal entries to record the purchase of the machine, the first annual payment, and the final payment on the note. Answer:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Hornet Motors purchased a custom-made metal press for use in repairing wrecked cars. The press was installed on January 2, 2018. The press had a market value of $300,000. Hornet
agreed to pay for the press in three equal installments beginning December 31, 2018. At the time, Hornet's incremental borrowing rate was 7%.
Required: Compute the installment payments and prepare the three-year amortization table for the note payable. Prepare the journal entries to record the purchase of the machine,
the first annual payment, and the final payment on the note.
Answer:
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