Prepare an amortization table for the note payable

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Question - Carter Company is acquiring equipment as follows: Carter will pay cash of $200,000 and sign a non-interest bearing note with a face amount of $1,331,000.

The fair value (i.e. retail price/market value) of equipment on 3/31/2021 is $1,200,000.

The equipment will be placed in operations on the acquisition date with an expected life of 10 years.

Carter Company uses straight-line depreciation and expects no salvage value.

The face amount is payable 3 years from the date of acquisition (3/31/2021). Carter Company uses a calendar year for its fiscal year. Carter Company can currently obtain loans from its banks at an interest rate of 10%.

Required - Prepare an amortization table for the note payable and all necessary journal entries for the year ended 12/31/2021 including, as appropriate, adjusting entries.

Reference no: EM133125053

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