Reference no: EM132665003
Question - Use Present Value Tables or your calculator to complete the requirements below.
Phillips Enterprises signed notes to make the following two purchases on January 1, 2020: new piece of equipment for $60,000, with payment deferred until December 31, 2021. The appropriate interest rate is 9% compounded annually.
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.
Required -
1. Complete the information needed to prepare cash flow diagrams for these two purchases.
a. n = ___ years
i = ___ % per year
What is the Amount of Payment and Deposit for 1/1/20 12/31/21?
b. n = ___ quarters
i = ___ % per quarter
What is the Amount of Payment and Deposit?
1/1/20
3/31/20
6/30/20
9/30/20
6/30/22
2. Prepare the entries to record these purchases in Phillips' journal.
2020 Jan. 1 (Record purchase of equipment)
2020 Jan. 1 (Record purchase of building)
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