A federal agency established to provide direct loans for older Americans enrolled in school or college made a three-year, 3 percent direct loan of $3,000 to be repaid in three equal annual installments of $1,060.59. The prevailing Treasury rate on short- and intermediate-term securities is 6 percent.
REQUIRED:
Prepare journal entries to record the loan and the three payments. If no entry is required, write "No entry required."
Present value factors, if needed
Present value of an annuity for 3 periods @ 6% = 2.67301
Present value of an annuity for 3 periods @ 3% = 2.82861
Present value of $1, @ 6%, 3 periods = .83962
Present value of $1, @ 3%, 3 periods = .91513

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The Answer of A federal agency established to provide direct loans for older Americans enrolled in school or college made a three-year, 3 percent direct loan of $3,000 to be repaid in three equal annual installments of $1,060.59. The prevailing Treasury rate on short- and intermediate-term securities is 6 percent.
REQUIRED:
Prepare journal entries to record the loan and the three payments. If no entry is required, write "No entry required."
Present value factors, if needed
Present value of an annuity for 3 periods @ 6% = 2.67301
Present value of an annuity for 3 periods @ 3% = 2.82861
Present value of $1, @ 6%, 3 periods = .83962
Present value of $1, @ 3%, 3 periods = .91513

A Federal Agency Established to Provide Direct Loans for Older