Question

DueNorth Mining Inc. purchased some crushing equipment on July 1, 2020 for $300,000. A down payment of $30,000 was required and the remainder was financed with a 8% instalment loan payable over 5 years with payments made on a quarterly basis. The quarterly payments required are $16,512 and include both interest and principal. The following is an extract from the loan amortization table the supplier provided to DueNorth : Payment Dates 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 12/31/21 Beginning loan balance $270,000 258,888 247,554 235,993 224,201 212,173 Payment $16,512 16,512 16,512 16,512 16,512 16,512 Interest $5,400 5,178 4,951 4,720 4,484 4,243 Principal $11,112 11,334 11,561 11,792 12,028 12,269 Ending loan balance $258,888 247,554 235,993 224,201 212,173 199,904 *(a) Prepare the journal entries for the purchase of the equipment and the first 2 quarterly payments in 2020 (use Long-Term Loan Payable account). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Sept. 30, 2020 Dec. 31, 2020

Answer 1

ACCOunt Name Cushing Equiprment TO cash Date oedis Debit July 300,000 2020 $30,000 TO LON9 team 1oon Payable 270000 CTO 2ec03e puchase 0f aushing squipment) Interest ExPense sep 30 5400 2020 Long teinm Nete LOOn POyable TO cash 16 512 CTO aecorg fiast Payment) Dec31 Tnterest ERPense P SI78 2020 Long term 10an payable 11339 16 S12 TO cash Second pavment CTO C COe LA