Entries for Installment Note Transactions ents or s12 303 beg ning on pecent e n

Question

Entries for Installment Note Transactions ents or s12 303 beg ning on pecent e n snar i On lan ary l of Year 1, B yson Company otta ed a S39,000 f ryer 10% nstalment note from Campbel B rk. The note rea res a mal pay Prepare an amertizstion table for this instalment note, similer to the one presented in Exhibit 4.Round the computation of the interest expense to the nearest whole dollac. Enter all amounts as positive numbers Amortization of Installment Notes Interest Expense (10% of January 1 January 1 Note Payment Decrease in December 31 For the Year Ending Carrying Amount(Cash Pald) Note Carrying Amount) Notes Payable Carrying Amount Year 2 Year 3 Year 4 b. Jounalize the entries for the issuance of the note and the four annual note payments. If an amount box does not require an entry, leave it blank. ar 2 Dec 31

Explanation / Answer

For the year ending Jan 1 carrying amount Note payment Interest expense Decrease in notes payable Dec 31 carrying amount Year 1 39000 12303 3900 8403 30597 Year 2 30597 12303 3060 9243 21354 Year 3 21354 12303 2135 10168 11186 Year 4 11186 12303 1117 11186 0 b Year 1 Jan 1 Cash 39000       Notes payable 39000 Year 1 Dec-31 Interest expense 3900 Notes payable 8403       Cash 12303 Year 2 Dec-31 Interest expense 3060 Notes payable 9243       Cash 12303 Year 3 Dec-31 Interest expense 2135 Notes payable 10168       Cash 12303 Year 4 Dec-31 Interest expense 1117 Notes payable 11186       Cash 12303 c Interest expense of $3900 would be reported on the income statement

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