On December 31, 2020, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2024. Faital Company's credit rating...

On December 31, 2020, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2024. Faital Company's credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 salvage value.

Instructions

(Round answers to the nearest cent.)

a.    Prepare the journal entry for the purchase on December 31, 2020.

b.    Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization (use effective-interest method) on December 31, 2021.

c.    Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2022.