Turn Buckle Company financed new equipment costing $50,000 with a five-year loan from a local bank. The bank charged 11% interest on the note.

Required

A. What would Turn Buckle’s annual payments be to the bank each year, assuming that the note and interest are paid in equal annual installments?

B. How much interest expense would the company record for the first year of the note and for the second year?

C. Using the format presented in the chapter, show how the first and second year-end loan payments would be recorded in the accounting system.