Journal entry to record the purchase of the truck

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Reference no: EM132420112

1. Cayuga Catering purchased a new, fully-equipped food truck on 1/1/16. The company signed a note that specified four equal annual payments (at each year-end) in the amount of $25,000. Assume a 8% interest rate. Round all amounts to the nearest dollar.

Required:

a. Prepare the journal entry to record the purchase of the truck.

b. Record the journal entry to record the payment for each year. You are encouraged to organize your work in an amortization table or by using t-accounts. Be sure to show supporting calculations and label your work.

c. What is the total interest paid on the loan?

Reference no: EM132420112

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