A Company Purchased Two New Delivery Vans for a Total

question 110

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: (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.

Identify cash flows from operating activities.

Determine the net cash provided by (used in) operating activities.

Analyze the impact of capital expenditures and cash dividends on cash flow.

Calculate a company's free cash flow.

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Definitions:

Guinness Book

A reference book published annually, listing world records both of human achievements and the extremes of the natural world.

Tertiary

Refers to the third level or stage in a sequence; in education, it commonly relates to post-secondary education such as universities and colleges.

Quaternary

Relating to the fourth stage or division, often used in context of geological periods or the sector of the economy that deals with knowledge-based activities.

Historiography

The study of the methods and principles through which history is written, including the different perspectives and interpretations.