Some equipment on contract entailing

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Benenson Company bought some equipment on a contract entailing a $200,000 cash down payment and an $800,000 lump sum to be paid at the end of 4 years. The same equipment can be purchased for $788,000 cash.

1. Prepare the journal entry for the acquisition of the equipment.

2. Prepare journal entries at the end of each of the first 2 years. Ignore entries for depreciation.

Please help along with explanation.

Reference no: EM131293240

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