Can some please help me on how to start this problem:
Adams Company purchased equipment from Tonna Corporation on June I, 2008. Tonna allowed Adams to pay for the equipment by issuing a $100,000, 4-year, zero-interest-bearing note. Adams will pay off the note in four equal annual installments, starting at the end of 2008. At the date of the transaction, the prevailing market rate of interest for obligations of this nature was 10%. Adams incurred freight costs of $353 and installation costs of $400 in making the equipment ready for use in its warehouse.
Adams plans to use the equipment for eight years, at the end of which time it will be sold for scrap for approximately $1,500.
Required:
(1) Prepare all journal entries made by Adams in 2008 to record the acquisition of the equipment.
(2) Prepare the adjusting entries made by Adams at 12/31/08 for depreciation (assuming Adams uses 150% declining balance) and amortization (if any) related to the note.
