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On January $1,20$X$1,$ Wade Crimbring, Inc., a dealer in used manufacturing equipment, sold a CNC milling machine to Fletcher Bros., a new business that plans to fabricate utility trailers. To conserve cash, Fletcher paid for the machine by issuing a $$200,000$ note, payable in five years. Interest at $5\%$ is payable annually with the first payment due on December $31,201.$ The going rate for loans of this type is $10\%.$ Use the PV of $1,$ PVAD of $1,$ and PVOA of $1$ tables where appropriate. $($Use the appropriate factor$($s$)$ from the tables provided.$)$

Required:

$1-$a$.$ What is the total present value of the note for Crimbring's sale of the machine on January $1,20$X$1?$

$1-$b$.$ Prepare the entry that Crimbring would make for the sale of the machine.

$2$ Prepare the entry that Crimbring would make on December $31,20$X$1,$ to record the receipt of the first interest payment.

$4.$ Assume that Crimbring opted to carry this note at its fair value. What should be the value of the note on Crimbring's December $31,20$X$1,$ balance sheet if the market interest rate is then $12\%?$ Assume that the December $31,201,$ payment has been made.

$5.$ Prepare the entry that Crimbring would make on December $31,20$X$1,$ to record the note at its fair value.

Req $1A$

Req $1B$

Prepare the entry that Crimbring would make for the sale of the machine. $($If no entry is required for a particular transaction, select $"$No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollars.$)$

Journal entry worksheet

$1$

Record the entry for the sale of machine by issuing a note.

Note: Enter debits before credits.

$\backslash$table$[[$Transaction$,$General Journal,Debit,Credit$],[$a$.,,,],[,,,],[,,,],[,,,],[,,,],[,,,]]$

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