A Company Purchased Two New Delivery Vans for a Total

question 76

Essay

A company purchased two new delivery vans for a total of $250,000 on January 1, 2009. 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, 2009. Each payment includes interest on the unpaid balance plus principal.
(1) Prepare a note amortization table using the format below:
$$\begin{array} { | l | c | c | c | c | c | } \hline \begin{array} { c } \text { Period } \\\text { Ending Date }\end{array} & \begin{array} { c } \text { Beginning } \\\text { Balance }\end{array} & \begin{array} { c } \text { Debit Interest } \\\text { Expense }\end{array} & \begin{array} { c } \text { Debit Notes } \\\text { Payable }\end{array} & \text { Credit Cash } & \begin{array} { c } \text { Ending } \\\text { Balance }\end{array} \\\hline 12 / 31 / 09 & & & & & \\\hline 12 / 31 / 10 & & & & & \\\hline 12 / 31 / 11 & & & & & \\\hline\end{array}$$
(2) Prepare the general journal entries to record the purchase of the vans on January 1, 2009 and the second annual installment payment on December 31, 2010.

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Definitions:

Mean Cost

The average cost of producing one unit of a product or service, calculated by dividing the total cost by the number of units produced.

Rats

Small rodents often used in scientific research to study genetics, diseases, and the effects of drugs.

Expected Cell Count

In the context of chi-square tests, the theoretical frequency count expected in a cell of a contingency table under the null hypothesis.

Two-Way Tables

A table used to display the frequency of different combinations of two categorical variables.