A Company Purchased Two New Delivery Vans for a Total

question 114

Essay

A company purchased two new delivery vans for a total of $250,000 on January 1,Year 1.The company paid $40,000 cash and signed a $210,000,3-year,8% note for the remaining balance.The note is to be paid in three annual end-of-year payments of $81,487 each,with the first payment on December 31,Year 1.Each payment includes interest on the unpaid balance plus principal.
(1)Prepare a note amortization table using the format below:
$$\begin{array} { | l | l | l | l | l | l | } \hline \text { Period } & & \text { Debit } & \text { Debit } & & \\\hline \text { Ending } & \text { Beginning } & \text { Interest } & \text { Notes } & \text { Credit } & \text { Ending } \\\hline \text { Date } & \text { Balance } & \text { Expense } & \text { Payable } & \text { Cash } & \text { Balance } \\\hline 12 / 31 / \text { Yr } 1 & & & & & \\\hline 12 / 31 / \text { Yr } 2 & & & & & \\\hline 12 / 31 / \text { Yr 3 } & & & & & \\\hline\end{array}$$
(2)Prepare the journal entries to record the purchase of the vans on January 1,Year 1 and the second annual installment payment on December 31,Year 2.

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