Problem 10-6A Installment notes LO C1 On November 1, 2017, Norwood borrows $200,

Question

Problem 10-6A Installment notes LO C1 On November 1, 2017, Norwood borrows $200,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $50,091 each year on October 31, (Table BI, Table B.2, Table B3, and Table B.4) (Use appropriate factor(s) from the tables provided.) Required 1. Complete an amortization table for this installment note. 2. Prepare the journal entries in which Norwood records the following: (a) Accrued interest as of December 31, 2017 (the end of its annual reporting period) (b) The first annual payment on the note. Complete this question by entering your answers in the tabs below. Req 1 Req 2A and 2B Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.) Ending Balance Period Ending Beginning Debit Interest Debit Notes Credit Cash Date Balance Expense Payable 10/31/2018 10/31/2019 10/31/2020 10/31/2021 10/31/2022 Total Req1 Req 2A and 2B

Explanation / Answer

(A) (B) (C) (D) (E) Period ending date Beginning balance Debit interest expense (A) X 8% .+ Debit notes payable (B) - (D) .= Credit cash Ending balance (A) - (C) 10/31/18 $ 2,00,000 $ 16,000 $ 34,091 $     50,091 $ 1,65,909 10/31/19 $ 1,65,909 $ 13,273 $ 36,819 $     50,091 $ 1,29,090 10/31/20 $ 1,29,090 $ 10,327 $ 39,764 $     50,091 $ 89,326 10/31/21 $ 89,326 $ 7,146 $ 42,945 $     50,091 $ 46,381 10/31/22 $ 46,381 $ 3,710 $ 46,381 $     50,091 $0   Total $ 50,456 $ 2,00,000 $ 2,50,456 Notes: Beginning balance = Prior ending balance Debit interest expense = 8% X Beginning balance Credit cash = Initial cash proceeds / PV Factor $2,00,000 / 3.99271 $ 50,091.29 Ending balance = Beginning balance - debit notes payable Date Account Titles and Explaination Debit Credit Dec 31 2017 Interest expense $ 2,667 Interest payable $ 2,667 Oct 31 2018 Interest expense $ 13,333 Interest payable $ 2,667 Notes payable $ 34,091 Cash $ 50,091

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