Prepare necessary adjusting entries relative to depreciation

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Reference no: EM132068733

On December 31, 2017, Ayayai Company acquired a computer from Plato Corporation by issuing a $595,000 zero-interest-bearing note, payable in full on December 31, 2021. Ayayai Company’s credit rating permits it to borrow funds from its several lines of credit at 12%. The computer is expected to have a 5-year life and a $75,000 salvage value.

Prepare the journal entry for the purchase on December 31, 2017.

Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2018.

Reference no: EM132068733

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