On January 1,2019,Information Company Purchased an Asset with a Cash

question 57

Essay

On January 1,2019,Information Company purchased an asset with a cash equivalent value of $70,000.Arrangements were made with the supplier to pay $10,000 cash on January 1,2019,and the balance was to be paid over a three-year period,with equal annual payments of $24,553 to be made at the end of 2019,2020,and 2021.Each payment will include principal plus interest on the unpaid balance at 11% per year.
A.Complete the following table:
*Round to reduce principal to zero.
B.Prepare the journal entry for the payment on December 31,2020.
C.Explain the change,over time,on the amount of interest and the balance of the debt principal.

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Definitions:

Disposable Income

Discretionary income for households to utilize in their saving and spending after the enforcement of income taxes.

Consumption

Refers to the use of goods and services by households or individuals for personal needs or for leisure, as opposed to investment or savings.

Billion

A numerical value represented by 1,000 million or 10^9.

Induced Consumption

Consumer spending that varies with income, representing the portion of income that households spend on goods and services rather than saving.