Murphy Company purchased a new machine for $120,000 on December 31, 2020. They obtained a loan
Murphy Company purchased a new machine for $120,000 on December 31, 2020. They obtained a loan
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...
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Question
Murphy Company purchased a new machine for $120,000 on December 31, 2020. They obtained a loan | |||||||||||
at the bank to finance the purchase. The terms of the loan were: 5 years, 5% interest, annual payments | |||||||||||
of principal and interest on December 31 of each year. | |||||||||||
a. Using the table provided, calculate the annual payment on the loan. | |||||||||||
b. Record the purchase of the new machine on December 31, 2020. | |||||||||||
c. Record the loan payment on December 31, 2021. | |||||||||||
d. Record the loan payment on December 31, 2022. | |||||||||||
d. Calculate the loan balance for December 31, 2022 after the payment. | |||||||||||
a. Using the table below, calculate the annual payment on the loan. | ||||||||||||||
Loan Amount | $1,200.00 | |||||||||||||
Annual Int. Rate | 5.0% | |||||||||||||
# of Payments | 5 | |||||||||||||
Monthly Payment | - | |||||||||||||
Yr | Payment | Principal | Interest | Ending Balance | ||||||||||
1 | - | #VALUE! | #VALUE! | - | ||||||||||
2 | - | - | - | - | ||||||||||
3 | - | - | - | - | ||||||||||
4 | - | - | - | - | ||||||||||
5 | - | - | - | - | ||||||||||
General Journal | ||||||||||||||
Date | Account | Debit | Credit | |||||||||||
2020 | ||||||||||||||
b. | 31-Dec | $120,000 | ||||||||||||
$120,000 | ||||||||||||||
2021 | ||||||||||||||
c. | 31-Dec | $24,000 | ||||||||||||
$6,000 | ||||||||||||||
$30,000 | ||||||||||||||
2022 | ||||||||||||||
d | 31-Dec | $24,000 | ||||||||||||
$6,000 | ||||||||||||||
$30,000 | ||||||||||||||
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