Fold and Hold Corporation purchased a machine, which had a current cash equivalent cost of $38,971 on January 1, 2014. Fold and Hold paid cash of $10,000 and signed an interest-bearing note for the balance, payable in six equal annual installments on each December 31 beginning with December 31, 2014. The note specified a 10% interest rate on the unpaid balance.
Requirements:
A. Prepare the journal entry to record the purchase on January 1, 2014 (round to the nearest dollar).
B. Prepare the entry to record the first installment payment on December 31, 2014 (round to the nearest dollar). Assume that no adjusting entries have been made during the year.

Question

Quizplus · Accepted Answer

The Answer of Fold and Hold Corporation purchased a machine, which had a current cash equivalent cost of $38,971 on January 1, 2014. Fold and Hold paid cash of $10,000 and signed an interest-bearing note for the balance, payable in six equal annual installments on each December 31 beginning with December 31, 2014. The note specified a 10% interest rate on the unpaid balance.
Requirements:
A. Prepare the journal entry to record the purchase on January 1, 2014 (round to the nearest dollar).
B. Prepare the entry to record the first installment payment on December 31, 2014 (round to the nearest dollar). Assume that no adjusting entries have been made during the year.

Fold and Hold Corporation Purchased a Machine, Which Had a Current