Springer, Inc., plans to acquire a trenching machine on June 1, 2011, with a list price of $52,000,.

Springer, Inc., plans to acquire a
trenching machine on June 1, 2011, with a list price of $52,000, by paying
$12,000 down and signing a four-year, $40,000 noninterest-bearing note. The
market rate of interest is 9 percent, compounded annually. Springer prepares
its budgeted financial statements on a calendar-year basis.

A. What price did Springer pay for the
machine?

B. How much interest will Springer pay over
the life of the note?

C. What are the cash flows related to the
loan shown on the 2011 budgeted statement of cash flows?

D. What is the interest expense shown on
the 2011
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Springer, Inc., plans to acquire a
trenching machine on June 1, 2011, with a list price of $52,000, by paying
$12,000 down and signing a four-year, $40,000 noninterest-bearing note. The
market rate of interest is 9 percent, compounded annually. Springer prepares
its budgeted financial statements on a calendar-year basis.

A. What price did Springer pay for the
machine?

B. How much interest will Springer pay over
the life of the note?

C. What are the cash flows related to the
loan shown on the 2011 budgeted statement of cash flows?

D. What is the interest expense shown on
the 2011 budgeted income statement?

E. What is the carrying value of the note
shown on the budgeted balance sheet for 2011?

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