XYZ, Inc. has purchased new equipment. The contract with the manufacturer requires XYZ to make a $10,000 down payment and to sign a note to pay $50,000 per year at the end of each of the next 6 years at an annual interest rate of 8%. Each equal payment of $50,000 includes principal and interest on the unpaid balance. Instructions: Answer the following questions. a. At what amount should XYZ record the equipment on the date of acquisition? Use the present value tables and Excel. b. Prepare the journal entry to record the equipment purchase. c. Prepare the journal entries to record the payments XYZ makes at the end of the first and the end of the second year.

XYZ, Inc. has purchased new equipment. The contract with the manufacturer requires XYZ to make a $10,000 down payment and to sign a note to pay $50,000 per year at the end of each of the next 6 years at an annual interest rate of 8%. Each equal payment of $50,000 includes principal and interest on the unpaid balance. Instructions: Answer the following questions. a. At what amount should XYZ record the equipment on the date of acquisition? Use the present value tables and Excel. b. Prepare the journal entry to record the equipment purchase. c. Prepare the journal entries to record the payments XYZ makes at the end of the first and the end of the second year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

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