A Company Purchased Two New Delivery Vans for a Total

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:
$\begin{array}{l|l|l|l|l|l}\text { Period } & & \text { Debit } & \text { Debit } & & \\\hline \text { Ending } & \text { Beginning } & \text { Interest } & \text { Notes } & \text { Credit } & \text { Ending } \\\hline \text { Date } & \text { Balance } & \text { Expense } & \text { Payable } & \text { Cash } & \text { Balance } \\\hline 12 / 31 / \mathrm{Yr} 1 & & & & & \\\hline 12 / 31 / \mathrm{Yr} 2 & & & & & \\\hline 12 / 31 / \mathrm{Yr} 3 & & & & &\end{array}$
(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.