E 10-4 A-D S90 Chapter 10 Acquisition and Disposition of Property, Plant, and EquipmentInstructions(a) Prepare the journal entry(ies) at the date of purchase. (Round to nearest dollar in all computation:(b) Prepare the journal entry(ies) at the end of the first year to record the payment and interest aseing that the company employs the effective-interest method.(c) Prepare the journal entry(ies) at the end of the second year to record the payment and interest(d) Assuming that the equipment had a 10-year life and no salvage value, prepare the journal entrunecessary to record depreciation in the first year. (Straight-line depreciation is employed.) Prepare entries on the5 E10-14 (Purchase of Equipment with Zero-Interest-Bearing Debt) Sterling Inc. has decided to purchaseequipment from Central Michigan Industries on January 2, 2012, to expand its production capacity to meet cus-tomers' demand for its product. Sterling issues a $900,000, 5-year, zero-interest-bearing note to Central Michiganfor the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. Thecompanywill payoff the note in five $180,000 installments due at the end of each year over the life of the note.

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5 E10-14 (Purchase of Equipment with Zero-Interest-Bearing Debt) Sterling Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2012, to expand its production capacity to meet cus- tomers' demand for its product. Sterling issues a $900,000,5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The will pay off the note in five $180,000 installments due at the end of each year over the life of the note. company

5 E10-14 (Purchase of Equipment with Zero-Interest-Bearing Debt) Sterling Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2012, to expand its production capacity to meet cus- tomers' demand for its product. Sterling issues a $900,000,5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 12%. The will pay off the note in five $180,000 installments due at the end of each year over the life of the note. company

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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