Question

DueNorth Mining Inc. purchased some crushing equipment on July 1, 2020 for $308,000. A down payment of $28,000 was required and the remainder was financed with a 7% instalment loan LORETIRE payable over 5 years with payments made on a quarterly basis. The quarterly payments required are $16,714 and include both interest and principal. The following is an extract from the loan GENER amortization table the supplier provided to DueNorth : Beginning Ending Payment loan Dates balance Payment Interest Principal balance 9/30/20 $280,000 $16,714 $4,900 $11,814 $268,186 12/31/20 268,186 4,693 12,021 256,165 3/31/21 256,165 12,231 243,934 12,445 231.489 231,489 218,826 218,826 3,829 12,885 205,941 loan 243,934 6/30/21 9/30/21 12/31/21 16,714 16,714 16,714 16,714 16,714 4,483 4,269 4,051 12,663 Your answer is partially correct. Try again. all Prepare the journal entries for the purchase of the equipment and the first 2 quarterly payments in 2020 use Long-Term Loan Payable account). (Cred countries are Indented when amount is entered. Do not indent manually. If no entry is required, select "Me Entry for the accounts and enter for the amounts.) Date July 1, 2020 Account Titles and Explanation Crushing Equipment T Cash TT Ntec Davale A nution of lohn Wiley S

correct version

Answer 1

Answer to Part b.

The following balance would be reported on December 31, 2020:

Loan Payable = $256,165

Current Liability = $12,231 + $12,445 + $12,663 + $12,885

Current Liability = $50,224

Long Term Liability = Loan Payable - Current Liability

Long Term Liability = $256,165 - $50,224

Long Term Liability = $205,941