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

Essay

Information Company purchased an asset that cost $70,000 on January 1,2010.Arrangements were made with the supplier to pay $10,000 cash on January 1,2010,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 2010,2011,and 2012.Each payment will include principal plus interest on the unpaid balance at 11% per year.
Requirements:

$\begin{array}{l}\text { Date } & \text { Payment } & \text { Interest }&\text { Reduction in} & \text { Unpaid } \\ & & \text { Expense}&\text { Principal} & \text { Principal } \\01 / 01 / 10 & &&&\\12 / 31 / 10 & &&&\\12 / 31 / 11& &&&\\12 / 31 / 12 & &&&\\\text { Totals }& &*&&\end{array}$ *Round to reduce principal to zero.
B.Prepare the journal entry for the payment on December 31,2011.
C.Explain the change,over time,on the amount of interest and the balance of the debt principal.