On November 1. 2015. Norwood borrows $540,000 cash from a bank by signing a five

Question

On November 1. 2015. Norwood borrows $540,000 cash from a bank by signing a five-year installment note bearing 7% interest. The note requires equal total payments each year on October 31. (Table B.1. Table B.2. Table B.3. and Table B.4) (Use appropriate factor(s) from the tables provided.) Complete the below table to calculate the total amount of each installment payment. Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.) Prepare the journal entries in which Norwood records the following: Accrued interest as of December 31. 2015 (the end of its annual reporting period). Prepare the journal entries in which Norwood records the following: Accrued interest as of December 31. 2015 (the end of its annual reporting period). The first annual payment on the note.

Explanation / Answer

Initial Cash Proceeds PV Factor Amount of annual Payament 540000 4.1002 131701 Period Ending Date Beginning Balance Debit Interest Debit Note Payable Credit Cash 10/31/2016 540000 37800 93901 131701 10/31/2017 446099 31227 100474 131701 10/31/2018 345625 24194 107507 131701 10/31/2019 238118 16668 115033 131701 10/31/2020 123085 8616 123085 131701 118505 540000 Date General Journal Debit Credit 12/31/2015 Interest Expenses 6300 Interest Payable 6300 Date General Journal Debit Credit 10/31/2015 Interest Expenses 31500 Interest Payable 6300 Notes Payable 93901 Cash 131701

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