On November 1, 2011, Leetch Ltd. borrows $560,000 cash from a bank by signing a

Question

On November 1, 2011, Leetch Ltd. borrows $560,000 cash from a bank by signing a five-year installment note bearing 9% interest. The note requires equal total payments each year on October 31. (Use Table B.3)

Required:
1.

Compute the total amount of each installment payment. (Round "PV Factor" to 4 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Installment payment $

2.

Complete an amortization table for this installment note. (Please calculate interest expense in the final period as the amount of cash minus the amount of the Beginning balance and make sure that the ending balance in the last period equals to "0". Leave no cells blank - be certain to enter "0" wherever required. Round "PV Factor" to 4 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Payments

Period Ending Date (A)
Beginning
Balance (B)
Debit
Interest
Expense (C)
Debit
Notes
Payable (D)
Credit
Cash (E)
Ending Balance
10/31/2012 $ $ $ $ $
10/31/2013
10/31/2014
10/31/2015
10/31/2016

Total $ $ $


3. Prepare the journal entries in which Leetch records the following:

(a)

Accrued interest as of December 31, 2011 (the end of its annual reporting period). (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Date General Journal Debit Credit
Dec. 31


(b)

The first annual payment on the note. (Round "PV Factor" to 4 decimal places. Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Date General Journal Debit Credit
Oct. 31

Explanation / Answer

560000= x PVIFA(9%,5) total amount of each installment payment= $143971.7759

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