Task: On 12/31/07 Joe Smith Company acquired a computer from Louis Corporation by issuing a $400,000 zero-bearing note payable in full on 12/31/11. Joe Smith Company's credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a %50,000 salvage value.
1) Prepare the journal entry for the purchase 12/31/07.
2) Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective interest method) on 12/31/08.
3) Prepare any necessary adjusting entries relative to depreciation and amortization on 12/31/09.