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On May 1,2017,Sea Escape Ltd

question 105

Essay

On May 1,2017,Sea Escape Ltd.purchases a new automobile for $18,000 from the dealer who provides the financing.The three-year,interest-free loan is repayable at $500 per month.The market rate of interest for similar transactions is 0.25% per month.
Required:
Prepare journal entries to record:
a.the purchase of the automobile.
b.the accrual of interest and the loan payment at the end of May 2017.


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