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:Period?DebitDebit??EndingBeginningInterestNotesCreditEndingDateBalanceExpensePayableCashBalance12/31/Yr 1?????12/31/Yr 2?????12/31/Yr 3?????(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.
What will be an ideal response?
(1)
| Period | ? | Debit | Debit | ? | ? |
| Ending | Beginning | Interest | Notes | Credit | Ending |
| Date | Balance | Expense | Payable | Cash | Balance |
| 12/31/Yr 1 | $210,000 | $16,800 | $64,687 | $81,487 | $145,313 |
| 12/31/ Yr 2 | 145,313 | 11,625 | 69,862 | 81,487 | 75,451 |
| 12/31/ Yr 3 | 75,451 | 6,036 | 75,451 | 81,487 | 0 |
Interest expense: $210,000 * 8% = $16,800
Notes payable debit: $81,487 ? $16,800 = $64,687
Ending balance: $210,000 ? $64,687 = $145,313
12/31/Yr 2:
Interest expense: $145,313 * 8% = $11,625
Notes payable debit: $81,487 ? $11,625 = $69,862
Ending balance: $145,313 ? $69,862 = $75,451
12/31/Yr 3:
Interest expense: $75,451 * 8% = $6,036
Notes payable debit: $81,487 ? $6,036 = $75,451
Ending balance: $75,451 ? $75,451 = $0
(2)
| 01/01/Yr 1: | Delivery Vans | 250,000 | ? |
| ? | Cash | ? | 40,000 |
| ? | Notes Payable | ? | 210,000 |
| ? | ? | ? | ? |
| 12/31/Yr1: | Interest Expense | 16,800 | ? |
| ? | Notes Payable | 64,687 | ? |
| ? | Cash | ? | 81,487 |
| 12/31/Yr 2: | Interest Expense | 11,625 | ? |
| ? | Notes Payable | 69,862 | ? |
| ? | Cash | ? | 81,487 |
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