American food services inc acquired a packaging machine

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American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2013. In payment for the $4 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%.

Required:

1. Prepare the journal entry for American Food Services' purchase of the machine on January 1, 2013.

2. Prepare an amortization schedule for the four-year term of the installment note.

3. Prepare the journal entry for the first installment payment on December 31, 2013.

4. Prepare the journal entry for the third installment payment on December 31, 2015.

Reference no: EM13394400

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