Teed's Contracting Company Bought a New Excavator on January 1

question 76

Essay

Teed's Contracting Company bought a new excavator on January 1, 2013.The company paid $10,000 down and signed a note receivable for the balance.The note required four annual cash payments of $18,000; the market interest rate is 8 percent
Required:
A) At what amount will the equipment be recorded on the balance sheet for 2013?
B) How much was the interest expense for 2013?
C) What is the total amount of interest Teed's will pay on the machine?

• A) At what amount will the equipment be recorded on the balance sheet for 2013?
• B) How much was the interest expense for 2013?
• C) What is the total amount of interest Teed's will pay on the machine?

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its investors.

Operating Activities

Business actions related directly to the production, sale, and delivery of goods and services, as distinguished from financing and investing activities.

Cash Dividends

Payments made by a corporation to its shareholders, typically out of its profits or reserves.

Accrued Liabilities

Financial obligations that a company has incurred during a period but has not yet paid by the end of that period.