Rae Company purchased a new vehicle by paying $10,400 cash on the purchase date

Question

Rae Company purchased a new vehicle by paying $10,400 cash on the purchase date and agreeing to pay $3,400 every three months during the next five years. The first payment is due three months after the purchase date. Rae's incremental borrowing rate is 8%. The liability reported on the balance sheet as of the purchase date, after the initial $10,400 payment was made, is closest to: (Table A.1, Table A.2, Table A.3, and Table A.4) (Use appropriate factor(s) from the tables provided.) $65,995. $55,595. $68,000. $78,400.

Explanation / Answer

Rae Company purchased a new vehicle by paying $10,400 cash on the purchase date

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