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Kingbird Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers' demand for its product. Kingbird issues a(n) $1, 056,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 11%. The company will pay off the note in five $211, 200 installments due at the end of each year over the life of the note.

Required: Prepare the journal entry at the date of purchase.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92724515

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