On January 2,2010,Cardy Computers Purchased Machinery by Paying $15,000 Down

question 74

Essay

On January 2,2010,Cardy Computers purchased machinery by paying $15,000 down and signing a 4-year,10% installment note for the $60,000 balance.The loan agreement called for 8 semiannual payments beginning July 1,2010.Determine the amount of each semiannual payment (round to the nearest dollar)and prepare journal entries for the first two payments,including the accrual at year end.Cardy has a December 31 year end.

---

Definitions:

Total Variable Costs

The sum of all costs that vary with the level of output or production, such as materials and labor, as opposed to fixed costs which remain constant regardless of the level of production.

Average Fixed Cost

The steady costs associated with production, irrespective of output volume, divided by the number of units produced.

Marginal Cost

The added cost faced when one additional unit of a product or service is produced.

Average Total Cost

The total cost of production divided by the quantity of output produced; it includes both fixed and variable costs.