Murphy Company purchased a new machine for $120,000 on December 31, 2020. They obtained a loan

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  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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