On January 1, 2016, Mission Company Agreed to Buy Some

Essay

On January 1, 2016, Mission Company agreed to buy some equipment from Anna Company. Mission Company signed a non-interest-bearing note, agreeing to pay Anna Company the entire $500,000 for the equipment on December 31, 2018. The market rate of interest for this note was 10%.
Required:
(Round all answers to whole dollar amounts.)
A.Prepare the journal entry Mission Company would record on January 1, 2016 related to this purchase.
B.Prepare the December 31, 2016, adjusting entry to record interest expense related to the note for the first year.Assume that no adjusting entries have been made during the year.
C.Prepare the December 31, 2017, adjusting entry to record interest expense related to the note for the second year.Assume that no adjusting entries have been made during the year.
D.Prepare the entry Mission Company would record on December 31, 2018, the due date of the note to record interest expense for the third year and payment of the note.Assume that no adjusting entries have been made during the year.Round the interest expense to an amount that will increase notes payable to the correct final payoff amount.