On November 1, 2017, Norwood borrows $590,000 cash from a bank by signing a five
ID: 2593109 • Letter: O
Question
On November 1, 2017, Norwood borrows $590,000 cash from a bank by signing a five-year installment note bearing 7% interest. The note requires equal payments of $143,895 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.)
Required:
1. Complete an amortization table for this installment note.
Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.)
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).
Record the interest accrued on the note as of December 31, 2017.
(b) The first annual payment on the note.
Record the first installment payment on October 31, 2018. Assume no reversing entries were prepared.
TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 0.793 0.7722 753 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 4 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? Using the factors of n = 12 and 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. You would need to invest S2,784 today ($5,000 × 0.5568).Explanation / Answer
1
complete and amortization table for this installment note
Annual installment: $143895
Period ending date
Beginning Balance
Debit interest expense
debit note payable
credit cash
Ending balance
10/31/2018
590000
41300
102595
143895
487405
10/31/2019
487405
34118
109777
143895
377628
10/31/2020
377628
26434
117461
143895
260167
10/31/2021
260167
18212
125683
143895
134484
10/31/2022
134484
9413
134484
143895
0
Total
129477
590000
719475
2
Accrued interest as of December 2017
Interest expense
6883.333
Interest Payable
6883.333
(590,000*7%*2/12)
b
The First annual Payment on the note
Notes payable
102595
Interest expense
34416.67
Interest Payable
6883.333
cash
143895
(590,000*7%*10/12)
1
complete and amortization table for this installment note
Annual installment: $143895
Period ending date
Beginning Balance
Debit interest expense
debit note payable
credit cash
Ending balance
10/31/2018
590000
41300
102595
143895
487405
10/31/2019
487405
34118
109777
143895
377628
10/31/2020
377628
26434
117461
143895
260167
10/31/2021
260167
18212
125683
143895
134484
10/31/2022
134484
9413
134484
143895
0
Total
129477
590000
719475
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.