On November 30, 2011, Harris Company arranged to purchase a $250,000 piece of equipment by making a 20 percent down payment and signing a 15-year installment loan contract with interest at 7 percent per year for the balance. The loan is to be repaid in monthly installments starting on December 31, 2011. Harris prepares its budgeted financial statements on a calendar-year basis.
A. What are the cash flows related to the loan shown on the budgeted statement of cash flows for 2011?
B. How much cash will the company pay over the life of the note?
C. How much interest expense will be shown on the budgeted income statement for 2011?
D. What is the carrying value of the note shown on the budgeted balance sheet for 2011?
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