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Prepare journal entry to record first installment payment

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Problem - At the beginning of 2006, VHF industries acquired a machine with a fair market value of $6,074,700 by signing a four year lease. Rentals are payable in four annual payments of 2 million at the end of each year.

1. What is the effective rate of interest implicit in the agreement?

2. Prepare the journal entry to record the purchase of the machine.

3. Prepare the journal entry to record the first installment payment at December 31, 2011.

4. Prepare the journal entry to record the second installment payment at December 31, 2012.

5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 11%. Prepare the journal entry to record the purchase of the machine

Could someone show me how to do this in excel?

Reference no: EM131921409

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