Question:
On January 1. 20X1, Graham Corporation purchased equipment by agreeing to pay $100,000 down and signing an installment loan agreeing to make three payments of $100,000 each at the end of 20X1, 20X2, and 20X3. The going rate of interest on similar transactions would be 10%.
Required:
1. Calculate the cost (exchange value) of equipment
2. Prepare the appropriate journal entries to record the transactions for the year, 20X1, including any year-end adjustments. Show Calculations, rounded to the nearest.