Question

On November 1, 2018, Norwood borrows $470,000 cash from a bank by signing a five-year installment note bearing 6% interest. The note requires equal payments of $111,575 each year on October 31. Table B1, Table B 2. Table B. 3, and Table B4) (Use appropriate factor(s) from the tables provided.) Required: 1. Complete an amortization table for this installment note. 2. Prepare the journal entries in which Norwood records the following: (a) Accrued interest as of December 31, 2018 (the end of its annual reporting period). (b) The first annual payment on the note. Complete this question by entering your answers in the tabs below. Req1 Req 2A and 28 Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.) Ending Period Ending Date Beginning Balance Debit Interest Expense + Debit Notes Payable = Credit Cash 10/31/2019 10/31/2020 10/31/2021 10/31/2022 10312023 Total Req 2A and 2B >

Answer 1

Solution 1:

Amortization table - Installment Note
Date	Beginning Balance	Debit interest expense	Debit notes payable	Credit Cash	Ending Balance
31-Oct-19	$470,000	$28,200	$83,375	$111,575	$386,625
31-Oct-20	$386,625	$23,198	$88,378	$111,575	$298,248
31-Oct-21	$298,248	$17,895	$93,680	$111,575	$204,567
31-Oct-22	$204,567	$12,274	$99,301	$111,575	$105,266
31-Oct-22	$105,266	$6,309	$105,266	$111,575	$0

Solution 2:

Journal Entries - Norwood
Date	Particulars	Debit	Credit
31-Dec-18	Interest expense Dr ($470,000*6%*2/12)	$4,700.00
	To Interest Payable		$4,700.00
	(Being interest accrued on note)
31-Oct-19	Notes Payable Dr	$83,375.00
	Interest payable Dr	$4,700.00
	Interest expense Dr ($470,000*6%*10/12)	$23,500.00
	To Cash		$111,575.00
	(To record installment payment)