Question

In: Accounting

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.

Solutions

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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