Question
P 9-4 Zinc Corp. obtained a $100,000 loan from First Capital Bank on December 31, 2019, its fiscal year-end. It purchased a piece of
P 9-4 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 E Year ended Dec. 31 Beginning loan balance (D-B) Reduction (A-C) Total Ending Interest of loan loan loan expense payable payment 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.
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