Installment Note. On January 1, 20x1, agree to buy equipment in exchange for six payments of $2,000 each, with the first one due today and the rest due at the end of each year (including 20x1). The stated interest rate is 12%. Calculate the recognition value of the equipment. Prepare the amortization table for the note. AT Payment 1/1/20x1 12/31/20x1 12/31/20x2 12/31/20x3 12/31/20x4 12/31/20x5 A2 Interest Reduction in Liability Prepare the journal entries to record the purchase and the next two payments. January 1, 20x1 December 31, 20x1 Balance December 31, 20x2
Installment Note. On January 1, 20x1, agree to buy equipment in exchange for six payments of $2,000 each, with the first one due today and the rest due at the end of each year (including 20x1). The stated interest rate is 12%. Calculate the recognition value of the equipment. Prepare the amortization table for the note. AT Payment 1/1/20x1 12/31/20x1 12/31/20x2 12/31/20x3 12/31/20x4 12/31/20x5 A2 Interest Reduction in Liability Prepare the journal entries to record the purchase and the next two payments. January 1, 20x1 December 31, 20x1 Balance December 31, 20x2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please explain all the steps needed and how to solve thank you.Answer in text
Transcribed Image Text:Installment Note. On January 1, 20x1, agree to buy equipment in exchange for six payments of
$2,000 each, with the first one due today and the rest due at the end of each year (including
20x1). The stated interest rate is 12%.
Calculate the recognition value of the equipment.
Prepare the amortization table for the note.
AT
Payment
1/1/20x1
12/31/20x1
12/31/20x2
12/31/20x3
12/31/20x4
12/31/20x5
A 2
Interest
Reduction in
Liability
Prepare the journal entries to record the purchase and the next two payments.
January 1, 20x1
December 31, 20x1
Balance
December 31, 20x2
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