In January 2007 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 2008 ............. 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?