SuMar Company purchased a new piece of machinery by paying $2,000 down and agreeing to pay $1,000 at the end of each year for 5 years. The appropriate interest rate is 8%.

Required:

1.	What is the cost of the machinery? What is the present value of the liability at the time of the purchase?
2.	Prepare the journal entry to record the purchase of the machinery and the associated liability on SuMars balance sheet.
3.	Prepare a table that shows the interest and ending balance of the liability each year.

Prepare the journal entry to record the purchase of the machinery on January 1. Additional Instruction

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Jan 2	Machinery		5992.71
2		Cash			2000
3		Notes Payable			[???]

What is the cost of the machinery? [???]

What is the present value of the liability at the time of the purchase? [???]

Prepare a table that shows the interest and ending balance of the liability each year. Additional Instruction

Period	Beginning Balance	Interest	Cash Payment	Ending Balance
1	3992.71	319.42	[???]	3312.13
2	3312.13	264.94	[???]	2577.10
3	2577.10	206.17	[???]	[???]
4	[???]	142.66	[???]	925.97
5	925.93	74.07	[???]	0

Please help me with [???] part...