AP$8-11{}^{}($Appendix $8$B$)$ Computing Equal Periodic Debt Payments, and Completing a Schedule with Journal Entries $($P$8-15)$

$$ LO$8-$S$2$

On January $1,2023,$ Ontario Company sold a new machine to Canada Corp. for $$70,000.$ Canada Corp. made a cash down payment of

$$20,000$ and signed a $$50,000,8$ percent note for the balance. The note is payable in three equal instalments due on December $31,$

$2023,2024,$ and $2025.$ Each payment includes principal plus interest on the unpaid balance. Canada Corp. recorded the purchase as

follows:

Required $($show computations and round to the nearest dollar$)$:

What is the amount of the equal annual payments that Canada Corp. must make?

What is the total interest on the note over the three years?

Complete the following debt payment schedule:

Prepare the journal entry for each of the three payments.

Explain why the amount of interest expense decreased each year.