Custom Industries purchases new specialized manufacturing equipment

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January 3rd, 2018

Custom Industries purchases new specialized manufacturing equipment on July 1, 2011. The equipment cash price is $96,000. Custom signs a deferred payment contract that provides for a down payment of $10,000 and a 10-year note for $112,420. The note is to be paid in 10 equal annual payments of $11,242. The payments include 5.193% interest and are made on June 30 of each year, beginning June 30, 2012. Prepare the journal entries for 2011, 2012, and 2013 related to the equipment purchase and the contract. Custom’s fiscal year ends on June 30.

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