Recording Purchase of Equipment through Debt Relay Company purchases equipment by making a down payment of $28,000 cash. In addition, Relay signs a note requiring monthly payments of $5,600, starting one month after purchase and continuing for a total of 20 months. The contract calls for no interest, yet the prevailing interest rate is 12% on similar transactions. a. Record the entry required for the purchase of this equipment. b. Record the entry to recognize interest expense, one month after this purchase. Ignore the cash payment part of the transaction. • Note: Round your answers to the nearest whole number. a. b. Account Name To record the purchase of equipment. To record the interest incurred. Dr. Cr.

Recording Purchase of Equipment through Debt Relay Company purchases equipment by making a down payment of $28,000 cash. In addition, Relay signs a note requiring monthly payments of $5,600, starting one month after purchase and continuing for a total of 20 months. The contract calls for no interest, yet the prevailing interest rate is 12% on similar transactions. a. Record the entry required for the purchase of this equipment. b. Record the entry to recognize interest expense, one month after this purchase. Ignore the cash payment part of the transaction. • Note: Round your answers to the nearest whole number. a. b. Account Name To record the purchase of equipment. To record the interest incurred. Dr. Cr.

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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