On January 1 of Year 1, Bryson Company obtained a $197,000, four-year, 5% instal

Question

On January 1 of Year 1, Bryson Company obtained a $197,000, four-year, 5% installment note from Campbell Bank. The note requires annual payments of $55,556, beginning on December 31 of Year 1.

Required:

Exhibit 4

Chart of Accounts

Amortization Table

Shaded cells have feedback.

a. Prepare a table for this installment note, similar to the one presented in

Exhibit 4

. Round amounts to the nearest dollar.

Points:

20 / 23

Feedback

Check My Worka. Review

Exhibit 4

in the text. The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest.

After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full.

Journal

Shaded cells have feedback.

b. Journalize the entries for the issuance of the note and the four annual note payments. Enter transactions for Year 1 on page 10 of the journal, Year 2 on page 12, Year 3 on page 15, and Year 4 on page 17. Refer to the Chart of Accounts for exact wording of account titles.

Question not attempted.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 0/63

1

2

3

4

5

Points:

0 / 12

Question not attempted.

PAGE 12

JOURNAL

ACCOUNTING EQUATION

Score: 0/37

1

2

3

Points:

0 / 7

Question not attempted.

PAGE 15

JOURNAL

ACCOUNTING EQUATION

Score: 0/37

1

2

3

a. Prepare a 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. Refer to the Chart of Accounts for exact wording of account titles. c. Describe how the annual note payment would be reported on the Year 1 income statement.

Explanation / Answer

1)

2)

3)Payment of interest in year 1 amounting to 9850 will be reported in income statement.

Repayment of 45706 is a repayment of liability (not reported in income statement[]

Amortisation of note schedule A B C D E fOr the year ended 31 dec Jan 1carrying amount Payment Interest expense decrease in note carrying value dec 31 1 197000 55556 9850   [197000*.05] 45706    [55556-9850] 151294   [197000-45706] 2 151294 55556 7565   [151294*.05] 47991   [55556-7565] 103303    [151294-47991] 3 103303 55556 5165   [103303*.05] 50391    [55556-5165] 52912 4 52912 55556 2644   [52912*.05] 52912 0

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.