Solvency Limited purchased equipment costing $150,000 on October 1, 2013, by paying 10% down and signing an 8%, 9-month note payable for the balance. Solvency Limited's year end is December 31.
a. Prepare journal entries to record the purchase of the equipment, the accrual of interest on December 31, and the payment of the note at maturity. For ease of computation assume that Solvency calculates interest expense based on the number of months, outstanding, rather than the number of days.
b. Determine the balance of any current liabilities associated with the note as of December 31, 2013.

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The Answer of Solvency Limited purchased equipment costing $150,000 on October 1, 2013, by paying 10% down and signing an 8%, 9-month note payable for the balance. Solvency Limited's year end is December 31.
a. Prepare journal entries to record the purchase of the equipment, the accrual of interest on December 31, and the payment of the note at maturity. For ease of computation assume that Solvency calculates interest expense based on the number of months, outstanding, rather than the number of days.
b. Determine the balance of any current liabilities associated with the note as of December 31, 2013.

Solvency Limited Purchased Equipment Costing $150,000 on October 1, 2013