Willie Winn Track Shoes acquired a machine from Betty Will Corporation. Betty Will completed construction of the machine on January 1, 2018. In payment for the $12 million machine, Willie Winn issued a 5-year installment note to be paid in five equal payments at the end of each year. The payments include interest at the rate of 10%.
Required:
1. Prepare the journal entry for Willie Winn's purchase of the machine on January 1, 2018.
2. Prepare the journal entry for the first installment payment on December 31, 2018. Show calculations.

Question

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The Answer of Willie Winn Track Shoes acquired a machine from Betty Will Corporation. Betty Will completed construction of the machine on January 1, 2018. In payment for the $12 million machine, Willie Winn issued a 5-year installment note to be paid in five equal payments at the end of each year. The payments include interest at the rate of 10%.
Required:
1. Prepare the journal entry for Willie Winn's purchase of the machine on January 1, 2018.
2. Prepare the journal entry for the first installment payment on December 31, 2018. Show calculations.

Willie Winn Track Shoes Acquired a Machine from Betty Will