Graded Homework

(PurchaseofComputerwithZero-Interest-BearingDebt)Cardinals Corporation purchased a computer on December 31, 2013, for $105,000, paying $30,000 down and agreeing to pay the balance in five equal installments of $15,000 payable each December 31 beginning in 2014. An assumed interest rate of

^{10% is implicit in the purchase price.}

Instructions

^{(Round to two decimal places.)}

(a)Prepare the journal entry(ies) at the date of purchase.

^{(b)Preparethejournalentry(ies)atDecember31,2014,torecordthepaymentandinterest(effective-}

^{interest method employed).}

^{(c)Preparethejournalentry(ies)atDecember31,2015,torecordthepaymentandinterest(effective-}

^{interest method employed).}