Problem
American Food Services, Inc. - Installment note; amortization schedule
American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2011. In payment for the $4 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%.
Task:
• Prepare the journal entry for American Food Services' purchase of the machine on January 1, 2011.
• Prepare an amortization schedule for the four-year term of the installment note.
• Prepare the journal entry for the first installment payment on December 31, 2011.
• Prepare the journal entry for the third installment payment on December 31, 2013.
The response should include a reference list. One-inch margins, Using Times New Roman 12 pnt font, double-space and APA style of writing and citations.