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On Dec. 31, 2013, Neyo Co. purchased machinery at $95,933.37. The Co. paid $20,000 down & agreed to finance the remainder by making 4 equal payments each Dec. 31 at the implicit interest rate of 12%. 1) Determine the amount of the annual payments to be made under the financing agreement. 2) Prepare the journal entry to record the acquisition of the machinery on Dec. 31, 2013. 3) Prepare the journal entry on Dec. 31, 2014.

On Dec. 31, 2013, Neyo Co. purchased machinery at $95,933.37. The Co. paid $20,000 down & agreed to finance the remainder by making 4 equal payments each Dec. 31 at the implicit interest rate of 12%. 1) Determine the amount of the annual payments to be made under the financing agreement. 2) Prepare the journal entry to record the acquisition of the machinery on Dec. 31, 2013. 3) Prepare the journal entry on Dec. 31, 2014.

FINANCIAL ACCOUNTING
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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On Dec. 31, 2013, Neyo Co. purchased machinery at $95,933.37. The Co. paid $20,000 down & agreed to finance the remainder by making 4 equal payments each Dec. 31 at the implicit interest rate of 12%. 1) Determine the amount of the annual payments to be made under the financing agreement. 2) Prepare the journal entry to record the acquisition of the machinery on Dec. 31, 2013. 3) Prepare the journal entry on Dec. 31, 2014.
Transcribed Image Text:On Dec. 31, 2013, Neyo Co. purchased machinery at $95,933.37. The Co. paid $20,000 down & agreed to finance the remainder by making 4 equal payments each Dec. 31 at the implicit interest rate of 12%. 1) Determine the amount of the annual payments to be made under the financing agreement. 2) Prepare the journal entry to record the acquisition of the machinery on Dec. 31, 2013. 3) Prepare the journal entry on Dec. 31, 2014.
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