Alden trucking company isreplacing part of their fleet of

Reference no: EM13615023

Alden Trucking Company isreplacing part of their fleet of trucks by purchasing them under anote agreement with Kenworthy on January 1, 2009. The noteagreement will require $10 million in annual payments starting onDecember 31, 2009 and continuing for a total of five years (finalpayment December 31, 2013). Kenworthy will charge Alden themarket interest rate of 10% compounded annually.

1. How muchwill Alden record as a debit to their equipment account and as acredit to their notes payable account on January 1,2009?

2. How much ofthe first $10 million payment on December 31, 2009 isinterest?

3. What is theremaining obligation on January 1, 2010 after the first payment hasbeen made?

Reference no: EM13615023

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