November 1, 2017

Peavy purchases a used truck for $10,000 paying $2,000 cash and the balance in a notes payable. The terms of the note are monthly payments for 4 years with a 5% annual interest rate. Mark fills up the truck with gasoline at a cost of $47. Mark decides that the truck will be useful for 4 years with a residual value of $1000. Simple interest is used for calculation of monthly payments and is not accrued until the 1st of the month when the payment is made. Mark purchases annual insurance for truck at a cost of $600 which he paid in cash.

What is the journal entry?