Moseby Corporation purchased equipment and in exchange signed a two- year promissory note. The note requires Moseby to make equal annual payments of $ 30,000 at the end of each of the next two years. Moseby has other promissory notes that charge interest at the annual rate of 5 percent.
Required:
1. Compute the present value of the note, rounded to the nearest dollar, using Moseby’s typical interest rate of 5 percent.
2. Show the journal entry to record the equipment purchase ( round to the nearest dollar).
3. Show the journal entry at the end of the first year to record the first payment of $ 30,000.
4. Show the journal entry at the end of the second year to record the second payment of $ 30,000.