Cordova company entered into a contract

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In January 2010, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of $215,000, was paid for as follows:

Down payment ....................... $ 55,000

Note payable in four equal annual payments starting in January 2011.. 120,000

600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100) ................ 60,000

Fair rate of interest on the non-interest-bearing note 10%

Required:
1. Prepare the journal entry to record the acquisition of the machine.
2. How would your answer change, if at all, if the $215,000 cash price were not available?

Reference no: EM13872601

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