Question

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Amber paid for the lathe by issuing a $450,000, three-year note that specified 6% 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. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Complete the below table to prepare the company's journal entry. 1-b. Prepare the journal entry on January 1, 2021, for Truax Corporation's sale of the lathe. Assume Truax spent $250,000 to construct the lathe. 2. Prepare an 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 maturity for Truax. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Req3 Complete the below table to prepare the company's journal entry. (Round final answers to the nearest whole dollar) Table values are based on: 3 12.0% Cash Flow Amount Interest $ 27,000 Principal $ 450,000 Price of equipment $ Present Value 320,301 > 64,849 385,150 $ < Reg 1A Req 1B >

Answer 1

Table values are based on:
n =	3
i =	12.0%
Cash Flow	Amount	Present Value
Interest	$   27,000	$         64,849
Principal	$ 450,000	$       320,301
		$       385,150

For interest 27,000 X 2.401831
For principal 450,000 X 0.71178

In requirement 3.

For the incorrect title

it should be DISCOUNT ON NOTES RECEIVABLE

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