Alden Trucking Company is replacing part of their fleet oftrucks by purchasing them under a note agreement with Kenworthy onJanuary 1, 2009. The note agreement will require $10 millionin annual payments starting on December 31, 2009 and continuing fora total of five years (final payment December 31,2013). Kenworthy will charge Alden the market interest rate of10% compounded annually. Round answers to the nearest tenth ofa million. ?
a. How much will Alden record as a debit to their equipment account and as a credit to their notes payable account on January1, 2009?
b. How much of the first $10 million payment on December 31,2009 is interest?
c. What is the remaining obligation on January 1, 2010 afterthe first payment has been made?