Response to the following problem:
Zinc Corp. obtained a $100,000 loan from First Capital Bank on December 31, 2016. It purchased a piece of heavy equipment for $95,000 on January 2, 2017. The loan bears interest at 8% per year on the unpaid balance and is repayable in four annual blended payments of $30,192 on December 31 each year, starting in 2017.
Required:
1. Prepare the journal entries to record the following transactions:
a. Receipt of loan proceeds from the bank
b. Purchase of the equipment.
2. Prepare the loan repayment schedule in the following format:
Zinc Corp.
Loan Repayment Schedule
A B C D E
(D- B) (A - C)
Year Beginning Reduction Total Ending
ended loan Interest of loan loan loan
Dec. 31 balance expense payable payment balance
2017
2018
2019
2020
3. Prepare the journal entry to record the last loan payment.
4. Prepare a partial balance sheet showing the loan liability at December 31, 2018.