Question

FinanceCo lent $91 million to Corbin Construction on January 1, 2018, to construct a playground. Corbin signed a three-year, 4% installment note to be paid in three equal payments at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for FinanceCo's lending the funds on January 1, 2018. 2. Prepare an amortization schedule for the three-year term of the installment note 3. Prepare the journal entry for the first installment payment on December 31, 2018. 4. Prepare the journal entry for the third installment payment on December 31, 2020 Complete this question by entering your answers in the tabs below Req 2 Req 1 3 and 4 Prepare an amortization schedule for the three-year term of the installment note. (Enter your answers in whole dollars.) Dec. 31Cash Payment Effective Interest Decrease in Balance Outstanding Balance 2018 2019 2020 Req2 Req 1 3 and 4

Answer 1

2
Annual payments = 9100000/2.77509 = $3279173
Dec. 31	Cash payment	Effective interest	Decrease in Balance	Outstanding Balance
				9100000
2018	3279173	364000	2915173	6184827
2019	3279173	247393	3031780	3153047
2020	3279173	126126	3153047	0
	9837519	737519	9100000
1,3&4
		Debit	Credit
January 01, 2018	Notes receivable	9100000
	Cash		9100000
December 31,2018	Cash	3279173
	Notes Receivable		2915173
	Interest revenue		364000
December 31,2020	Cash	3279173
	Notes Receivable		3153047
	Interest revenue		126126