Information Company Purchased an Asset That Cost $70,000 on January

Essay

Information Company purchased an asset that cost $70,000 on January 1, 2014. Arrangements were made with the supplier to pay $10,000 cash on January 1, 2014, and the balance was to be paid over a three-year period, with equal annual payments of $24,553 to be made at the end of 2014, 2015, and 2016. Each payment will include principal plus interest on the unpaid balance at 11% per year.
Requirements:
B. Prepare the journal entry for the payment on December 31, 2015.
C. Explain the change, over time, on the amount of interest and the balance of the debt principal.