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Mukilteo Company signed a note for $50,000 to purchase a new piece of equipment. Mukilteo...

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Accounting

Mukilteo Company signed a note for $50,000 to purchase a new piece of equipment. Mukilteo will pay back the $50,000 at the end of two years along with any accrued interest. The annual interest rate on the loan is 6 percent.

Required:

a) Compute the present value of this long-term liability. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

Note: Use appropriate factor(s) from the tables.

b) Prepare the journal entry Mukilteo will record on the day it purchases the piece of equipment and signs the note.

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