Question

Entries for Installment Note Transactions On January 1, Year 1, Bryson Company obtained a $58,000, four-year, 10% installment note from Campbell Bank. The note requires annual payments of $18,297, beginning on December 31, Year 1. a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Note: Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers. In Year 4, round the amount in the Decrease in Notes Payable column either up or down to ensure that the Carrying Amount zeroes out. Year Ending December 31 Amortization of Installment Notes Interest Expense (10% of January 1 Note Payment Note Carrying (Cash Paid) Amount) January 1 Carrying Amount Decrease in Notes Payable December 31 Carrying Amount Year 1 Year 2 Year 3 Year 4 b. Journalize the entries for the issuance of the note and the four annual note payments

Answer 1

Answer a) Amortisation table : Intersst year ending December January 1 Carrying amount Nole payment (cash poud) recrease in note payable December 31 carrying amount. Payable 34 5,800 18,297 12497 45,503 58000 year 1 4550 13,747 31756 45503 18,297 yeara 3175 15122 16,634 year3 51,756 18,297 16,634 16,634 Yeart 1663 18,297 Journal entries : Date porticulars 58000 Уест 1 Jaen 1 58000 year 1 12,497 5800 осы 18,2q7 Cash account DY TO 10), instalment note peegable 10'/. instalment note payable alcoy Interest Expense ale bo TO cash Account id), instalment note payable ale or Interest Expense ale or TO cash Account 10% installment Note payable de Do Interest Expense ale or To cash Account 13,747 year 2 Dec 3) 4550 18,297 15122 year 3 pec 31 3175 .18,247

year4 Dec 31 16634 10). instalment Note payable a interest Expense ale To cash al DV or 1663 18,297 c) $ 5,800 would be reported in the income Statement as interest expense.