Note Payable Issued in Exchange for an Asset
Response to the following problem:
On January 1, 2010, the Sanders Corporation purchased equipment having a fair value of $68,301.30 by issuing a non-interest-bearing, $100,000, four-year note due December 31, 2013.
Required
Prepare the journal entries to record (1) the purchase of the equipment, (2) the annual interest charges over the life of the note, and (3) the repayment of the note.
Show all work and calculations.