E14-18 Note with unrealistic interest rate; lender; amortization schedule. Amber Mining and Miling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2016. Amber paid for the lathe by issuing a $600,000, 3 year note that specified 4% interest, payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions that 12% was a reasonable rate of interest.1. Prepare the journal entry on January 1, 2016 for Truax Corporation's sale of the lathe.2. Prepare and amortization schedule for the three-year term of the note.3. prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at the maturity for Truax.
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E14-18 Note with unrealistic interest rate; lender; amortization schedule. Amber Mining and Miling,...
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