(Entries for Zero-Interest-Bearing Note) On December 31, 2010, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2014. Faital Company's credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 salvage value.
(a) Prepare the journal entry for the purchase on December 31, 2010.
(b) Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2011.
(c) Prepare any necessary adjusting entries relative to depreciation and amortization on December 31,2012.