Lob Corporation purchased a new delivery truck on March 1, 2024, for $60,000. The company paid $15,000 in cash as a down payment and financed the remaining $45,000 with a 5-year loan at an annual interest rate of 6%. The truck has an estimated useful life of 8 years and a salvage value of $4,000. XYZ Corporation uses the straight-line method for deprecation. The company makes monthly loan payments, with the first payment due on April 1, 2024. Each monthly payment includes both principal and interest. XYZ Corporation's accounting period ends on December 31. Prepare the journal entries for the initial purchase of the truck on March 1, 2024, the first loan payment on April 1, 2024, and the adjusting entries for depreciation and interest accrual on December 31, 2024. On July 1, 2024, ABC Company purchased a new piece of manufacturing equipment for $80,000. The company paid $20,000 in cash as a down payment and financed the remaining $60,000 with a 4-year loan at an annual interest rate of 5%. The equipment has an estimated useful life of 6 years and a salvage value of $5,000. ABC Company uses the straight-line method for depreciation. The company makes quarterly loan payments, with the first payment due on October 1, 2024. Each quarterly payment includes both principal and interest. ABC Company's accounting period ends on December 31. Prepare the journal entries for the initial purchase of the equipment on July 1, 2024, the first loan payment on October 1, 2024, and the adjusting entries for depreciation and interest accrual on December 31, 2024.
Lob Corporation purchased a new delivery truck on March 1, 2024, for $60,000. The company paid $15,000 in cash as a down payment and financed the remaining $45,000 with a 5-year loan at an annual interest rate of 6%. The truck has an estimated useful life of 8 years and a salvage value of $4,000. XYZ Corporation uses the straight-line method for deprecation. The company makes monthly loan payments, with the first payment due on April 1, 2024. Each monthly payment includes both principal and interest. XYZ Corporation's accounting period ends on December 31. Prepare the journal entries for the initial purchase of the truck on March 1, 2024, the first loan payment on April 1, 2024, and the adjusting entries for depreciation and interest accrual on December 31, 2024. On July 1, 2024, ABC Company purchased a new piece of manufacturing equipment for $80,000. The company paid $20,000 in cash as a down payment and financed the remaining $60,000 with a 4-year loan at an annual interest rate of 5%. The equipment has an estimated useful life of 6 years and a salvage value of $5,000. ABC Company uses the straight-line method for depreciation. The company makes quarterly loan payments, with the first payment due on October 1, 2024. Each quarterly payment includes both principal and interest. ABC Company's accounting period ends on December 31. Prepare the journal entries for the initial purchase of the equipment on July 1, 2024, the first loan payment on October 1, 2024, and the adjusting entries for depreciation and interest accrual on December 31, 2024.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Lob Corporation purchased a new delivery truck on March 1, 2024, for $60,000. The company paid
$15,000 in cash as a down payment and financed the remaining $45,000 with a 5-year loan at an annual
interest rate of 6%. The truck has an estimated useful life of 8 years and a salvage value of $4,000. XYZ
Corporation uses the straight-line method for deprecation. The company makes monthly loan payments,
with the first payment due on April 1, 2024. Each monthly payment includes both principal and interest.
XYZ Corporation's accounting period ends on December 31. Prepare the journal entries for the initial
purchase of the truck on March 1, 2024, the first loan payment on April 1, 2024, and the adjusting entries
for depreciation and interest accrual on December 31, 2024. On July 1, 2024, ABC Company purchased
a new piece of manufacturing equipment for $80,000. The company paid $20,000 in cash as a down
payment and financed the remaining $60,000 with a 4-year loan at an annual interest rate of 5%. The
equipment has an estimated useful life of 6 years and a salvage value of $5,000. ABC Company uses
the straight-line method for depreciation. The company makes quarterly loan payments, with the first
payment due on October 1, 2024. Each quarterly payment includes both principal and interest. ABC
Company's accounting period ends on December 31. Prepare the journal entries for the initial purchase
of the equipment on July 1, 2024, the first loan payment on October 1, 2024, and the adjusting entries
for depreciation and interest accrual on December 31, 2024.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education