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At January 1, 2011, Brant Cargo acquired equipment by issuing a five-year, $150,000 (payable at maturity), 4% note. The market rate of interest for notes of similar risk is 10%.
Required:
1. Prepare the journal entry for Brant Cargo to record the purchase of the equipment.
2. Prepare the journal entry for Brant Cargo to record the interest at December 31, 2011.
3. Prepare the journal entry for Brant Cargo to record the interest at December 31, 2012.
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