Jan. 1. Issued the note for cash at its face amount. Dec. 31. Paid the annual pa
ID: 2532130 • Letter: J
Question
Jan. 1. Issued the note for cash at its face amount. Dec. 31. Paid the annual payment on the note, which consisted of interest of $7,200 and Year 4 Dec. 31. Paid the annual payment on the note, including $3,134 of interest. The remainder principal of $21,288. of the payment reduced the principal balance on the note. EX 14-12 Entries for installment note transactions OBJ. 4 On January 1, Year 1, Bryson Company obtained a $147,750, four-year, 7% installment note from Campbell Bank. The note requires annual payments of $43,620, beginning on December 31, Year 1. a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4 b. Journalize the entries for the issuance of the note and the four annual note payments c. Describe how the annual note payment would be reported in the Year 1 income statement.Explanation / Answer
Amortization table: Date Outstanding Annual Interest Principal amount Outstanding bal. in Beg. Instalment paid repaid at the end Jan1 Yr1 147,750 Dec31 Yr1 147750 43620 10343 33277 114,473 Dec31 Yr 2 114,473 43620 8013 35607 78,866 Dec31 Yr3 78866 43,620 5521 38099 40,767 Dec31 Yr4 40767 43,620 2853 40767 0 Journal Entries: Date Accounts title and explanations Debit $ Credit $ jan1 Yr1 Cash Account Dr. 147,750 7% Instalment notes payable 147,750 Dec31 Yr1 Interest expense Dr. 10343 7% Instalment notes payable Dr. 33,277 Cash account 43620 Dec31 Yr2 Interest expense Dr. 8013 7% Instalment notes payable Dr. 35,607 Cash account 43620 Dec31 Yr3 Interest expense Dr. 5521 7% Instalment notes payable Dr. 38099 Cash account 43620 Dec31 Yr4 Interest expense Dr. 2853 7% Instalment notes payable Dr. 40767 Cash account 43620 Rreq 3: Income Statement of Year1 will be reflecting an interest expense paid of $ 10,343
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