Prepare journal entry to record the acquisition of machine

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On January 1, 2013, the Farmington Company purchased a packaging and labeling machine. Farmington paid $25,000 down and signed a noninterest bearing note requiring six annual installments of $10,000 to be paid on each December 31 beginning December 31, 2013. The fair value of the machine is not determinable. An interest rate of 8% properly reflects the time value of money in this situation.

a) Prepare the journal entry to record the acquisition of the machine. Round computations to the nearest dollar.

b) Prepare the journal entry to record the first payment on December 31, 2013. Round computations to the nearest dollar.

c) Prepare the journal entry to record the second payment on December 31, 2014. Round computations to the nearest dollar.

Reference no: EM131268410

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