Question: Refer to the situation described in E 1417. Required: 1. Prepare the journal entry on January 1, 2021, for Truax Corporations sale of the lathe.

Refer to the situation described in E 14–17.

Required:
1. Prepare the journal entry on January 1, 2021, for Truax Corporation’s sale of the lathe. Assume Truax spent $400,000 to construct the lathe.
2. Prepare an amortization schedule for the three-year term of the note.
3. Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity for Truax.

E 14–17

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Amber paid for the lathe by issuing a $600,000, threeyear note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 12% was a reasonable rate of interest.

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Requirement 1 Interest 24000 x 240183 57644 Principal 600000 x 071178 427068 Present value of the note 484712 4 600000 Present value of an ordinary annuity of 1 n 3 i 12 Table 4 Present value of 1 n 3 ... View full answer

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