A Company Purchased Two New Delivery Vans for a Total

question 123

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:
$\begin{array}{l|l|l|l|l|l}\text { Period } & & \text { Debit } & \text { Debit } & & \\\hline \text { Ending } & \text { Beginning } & \text { Interest } & \text { Notes } & \text { Credit } & \text { Ending } \\\hline \text { Date } & \text { Balance } & \text { Expense } & \text { Payable } & \text { Cash } & \text { Balance } \\\hline 12 / 31 / \mathrm{Yr} 1 & & & & & \\\hline 12 / 31 / \mathrm{Yr} 2 & & & & & \\\hline 12 / 31 / \mathrm{Yr} 3 & & & & &\end{array}$
(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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Definitions:

Primary Bronchi

The major air passages that diverge from the lower end of the trachea and enter the lungs to facilitate respiration.

Heart

A muscular organ that pumps blood through the circulatory system by rhythmic contractions.

Lung

A pair of respiratory organs situated within the thorax, responsible for gas exchange between the air and the blood.

Organ Systems

Groups of organs working together to perform complex functions necessary for life and health.