On January 1, 2010, the Billips Corporation purchased equipment having a fair value of $72,054.94 by issuing a $90,000 note, payable in three $30,000 annual installments beginning December 31, 2010.
Requirement:
Prepare
(1) The journal entry to record the purchase of the equipment,
(2) A schedule to compute the annual interest expense,
(3) The journal entries to record yearly interest expense and note repayments over the life of the note.