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Prepare the journal entries to record the transactions

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Question - Zinc Corp. obtained a $100,000 loan from First Capital Bank on December 31, 2019, its fiscal year-end. It purchased a piece of heavy equipment for $95,000 on January 1, 2020. 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 2020.

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 Year ended Dec. 31 Beginning loan balance Interest expense (D - B) Reduction of loan payable Total loan payment (A - C) Ending loan balance 2020 2021 2022 2023

3. Prepare the journal entry to record the last loan payment.

4. Prepare a partial balance sheet showing the loan liability at December 31, 2021.

Reference no: EM133033774

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