Question 4 (of 7) 0.75 points Amber Mining and Milling, Inc., contracted with Tr

Question

Question 4 (of 7) 0.75 points Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2016. Amber paid for the lathe by issuing a $600,000, three-year note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 12% was a reasonable rate of interest. (FVofS1. PyoS1. AAofS1, PVA of$1. Fy Dof $1 and PVAD of $1) (Use appropriate factor(s) from the tablos provided.) Required: 1-a. Complete the table below to determine the price of the equipment. values are based on: Amount Present Value Price of equipment 1-b. Prepare the journal entry on January 1, 20 no entry is required for a account field.) 16, for Amber Mining and Milling's purchase of the lathe. (Ir transaction/event, select "No journal entry required in the first 20 8 7 2 3 4 6

Explanation / Answer

1)a. Price of Equipment :-

1)b. Journal Entry :-

2).

3) Journal Entries :-

Particulars Amount($) Factor Present Value Interest ($600000*4%) 24000 2.402 $57648 Principal 600000 0.712 $427200 Total $484848

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