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Prob 14-3 - Assig nment Pr int View Score 46.25 3 out of...

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2/25/14 Assignment Print View ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printviewSingle 1/4 Score: 46.25 out of 100 points (46.25%) 3. aw ard: 15 out of 15.00 points 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, 2013. Amber paid for the lathe by issuing a $600,000, three-year 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. ( FV of $1 , PV of $1 , FVA of $1 , PVA of $1 , FVAD of $1 and PVAD of $1 ) (Use appropriate factor(s) from the tables provided.) Required: 1.1 Complete the below table to prepare the company's journal entry. $ $ $ $ Table values are based on: n = 3 i = 12.0% Cash Flow Amount Present Value Interest 24,000 57,644 Principal 600,000 427,068 Price of machinery 484,712 1.2 Prepare the journal entry on January 1, 2013, for Amber Mining and Milling’s purchase of the lathe. (If no journal entry is required for a event, select "No journal entry required" in the first account field.) Event General Journal Debit Credit 1
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