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Prepare the cash payment and interest expense entries

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Phillips Enterprises signed notes to make the following two purchases on January 1, 2020:

  1. new piece of equipment for $60,000, with payment deferred until December 31, 2021. The appropriate interest rate is 9% compounded annually.
  2. small building from Richter Construction. The terms of the purchase require a $75,000 payment at the end of each quarter, beginning March 31, 2020, and ending June 30, 2022. The appropriate interest rate is 2% per quarter.

Problem 1: Prepare the entries to record these purchases in Phillips' journal.

Problem 2: Prepare the cash payment and interest expense entries for Purchase b at March 31, 2020, and June 30, 2020. If an amount box does not require an entry, leave it blank.

Reference no: EM132779289

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