September 4: You purchase a vehicle for your business for $55,000 and finance the vehicle at...

September 4: You purchase a vehicle for your business for $55,000 and finance the vehicle at a rate of 5% for 6 years. First monthly payment is due on October 4. You will need to create a loan amortization schedule to determine the amount of the monthly note and the interest expense for each month. When recording journal entries, round all amounts to the nearest dollar.

Recording Purchase:

9/4/2018	Vehicles	55000
	Notes Payable (long-term)		55000

9/30/18 You accrued interest on the note. Accrue interest based on the number of days in the month (verified as correct):

9/30/2018	Interest Expense	191.00
	Interest Payable		191.00

The question is to journal these:

10/4 You make the first monthly payment to Pig E Banks by issuing check #106.

10/30 You accrued interest on the Pig E. Bank note. Accrue interest based on the number of days in the month.

Expert Solution

Below is schedule-

No	Date	Payment	Interest	Principal	Balance
	MM-DD-YYYY
Loan:	09-04-2018	0	0	0	55,000.00
1	10-04-2018	885.77	229.17	656.6	54,343.40
2	11-04-2018	885.77	226.43	659.34	53,684.06
3	12-04-2018	885.77	223.68	662.09	53,021.97
4	01-04-2019	885.77	220.92	664.85	52,357.12
5	02-04-2019	885.77	218.15	667.62	51,689.50
6	03-04-2019	885.77	215.37	670.4	51,019.10
7	04-04-2019	885.77	212.58	673.19	50,345.91
8	05-04-2019	885.77	209.77	676	49,669.91
9	06-04-2019	885.77	206.96	678.81	48,991.10
10	07-04-2019	885.77	204.13	681.64	48,309.46
11	08-04-2019	885.77	201.29	684.48	47,624.98
12	09-04-2019	885.77	198.44	687.33	46,937.65
13	10-04-2019	885.77	195.57	690.2	46,247.45
14	11-04-2019	885.77	192.7	693.07	45,554.38
15	12-04-2019	885.77	189.81	695.96	44,858.42
16	01-04-2020	885.77	186.91	698.86	44,159.56
17	02-04-2020	885.77	184	701.77	43,457.79
18	03-04-2020	885.77	181.07	704.7	42,753.09
19	04-04-2020	885.77	178.14	707.63	42,045.46
20	05-04-2020	885.77	175.19	710.58	41,334.88
21	06-04-2020	885.77	172.23	713.54	40,621.34
22	07-04-2020	885.77	169.26	716.51	39,904.83
23	08-04-2020	885.77	166.27	719.5	39,185.33
24	09-04-2020	885.77	163.27	722.5	38,462.83
25	10-04-2020	885.77	160.26	725.51	37,737.32
26	11-04-2020	885.77	157.24	728.53	37,008.79
27	12-04-2020	885.77	154.2	731.57	36,277.22
28	01-04-2021	885.77	151.16	734.61	35,542.61
29	02-04-2021	885.77	148.09	737.68	34,804.93
30	03-04-2021	885.77	145.02	740.75	34,064.18
31	04-04-2021	885.77	141.93	743.84	33,320.34
32	05-04-2021	885.77	138.83	746.94	32,573.40
33	06-04-2021	885.77	135.72	750.05	31,823.35
34	07-04-2021	885.77	132.6	753.17	31,070.18
35	08-04-2021	885.77	129.46	756.31	30,313.87
36	09-04-2021	885.77	126.31	759.46	29,554.41
37	10-04-2021	885.77	123.14	762.63	28,791.78
38	11-04-2021	885.77	119.97	765.8	28,025.98
39	12-04-2021	885.77	116.77	769	27,256.98
40	01-04-2022	885.77	113.57	772.2	26,484.78
41	02-04-2022	885.77	110.35	775.42	25,709.36
42	03-04-2022	885.77	107.12	778.65	24,930.71
43	04-04-2022	885.77	103.88	781.89	24,148.82
44	05-04-2022	885.77	100.62	785.15	23,363.67
45	06-04-2022	885.77	97.35	788.42	22,575.25
46	07-04-2022	885.77	94.06	791.71	21,783.54
47	08-04-2022	885.77	90.76	795.01	20,988.53
48	09-04-2022	885.77	87.45	798.32	20,190.21
49	10-04-2022	885.77	84.13	801.64	19,388.57
50	11-04-2022	885.77	80.79	804.98	18,583.59
51	12-04-2022	885.77	77.43	808.34	17,775.25
52	01-04-2023	885.77	74.06	811.71	16,963.54
53	02-04-2023	885.77	70.68	815.09	16,148.45
54	03-04-2023	885.77	67.29	818.48	15,329.97
55	04-04-2023	885.77	63.87	821.9	14,508.07
56	05-04-2023	885.77	60.45	825.32	13,682.75
57	06-04-2023	885.77	57.01	828.76	12,853.99
58	07-04-2023	885.77	53.56	832.21	12,021.78
59	08-04-2023	885.77	50.09	835.68	11,186.10
60	09-04-2023	885.77	46.61	839.16	10,346.94
61	10-04-2023	885.77	43.11	842.66	9,504.28
62	11-04-2023	885.77	39.6	846.17	8,658.11
63	12-04-2023	885.77	36.08	849.69	7,808.42
64	01-04-2024	885.77	32.54	853.23	6,955.19
65	02-04-2024	885.77	28.98	856.79	6,098.40
66	03-04-2024	885.77	25.41	860.36	5,238.04
67	04-04-2024	885.77	21.83	863.94	4,374.10
68	05-04-2024	885.77	18.23	867.54	3,506.56
69	06-04-2024	885.77	14.61	871.16	2,635.40
70	07-04-2024	885.77	10.98	874.79	1,760.61
71	08-04-2024	885.77	7.34	878.43	882.18
72	09-04-2024	885.86	3.68	882.18	0

Journal entry for the accrued interest from 1st october to 4th october
		Debit	Credit
10-04-2018	Interest expense	$ 38.17
	Interest payable		$ 38.17

Journal entry for the 1st installment payment
10-04-2018	Interest Payable	$ 229.17
	Note Payable (Loan term)	$ 656.60
	To Bank		$ 885.77

Journal Entry for the Accrued interest
30-10-2018	Interest expense	$ 188.69
	Interest payable		$ 188.69

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