On January $2,2021,$ Newell Manufacturing purchased a new drill press that had a

cash purchase price of $$6,340.$ Newell decided instead to pay on an installment

basis. The installment contract calls for four annual payments of $$2,000$ each

beginning in one year. Newell was not required to make an initial down payment

for the drill press.

Required:

Verify that the imputed interest rate on the installment loan is $10\%($hint: use

the PV of an ordinary annuity factor table to calculate the present value of

$$6,340.$

What journal entry should Newell make on January $2,2021,$ to record the drill

press purchase?

Complete an amortization table for the installment note. How much interest

expense would Newell record in $2021$ for the installment loan? What would the

loan balance be on December $31,2021?$

How much interest expense would Newell record in $2022$ for the installment

loan? What would the loan balance be on December $31,2022-$ one day before

Newell makes the second loan payment