Question

ntries for installment note transactions Instructions Chart of Accounts Amortization Table Journal Final Question Instructions On January 1 of Year 1, Bryson Company obtained a $150,000, four-year, 9% installment note from Campbell Bank. The note requires annual payments of $46,300, beginning on December 31 of Year 1. Required: 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.

Answer 1

Answer(a) Amortization of Installment Notes A B C D E (A* 9%) (B-C) (A-D) For the Period January 1 Note Interest Decrease in December 31 Ending Dec 31 Carrying Amount Payment Expense Notes Payable Carrying Amount Year 1 $150,000 $46,300 $13,500 $32,800 $117,200 Year 2 117,200 46,300 10,548 35,752 81,448 Year 3 81,448 46,300 7,330 38,970 42,478 Year 4 42,478 46,300 3,822 42,478 0 $185,200 $35,200 $150,000

Answer(b) Journal Date Description Year 1, Jan 1 Cash Notes Payable Credit Debit $150,000 $150,000 Year 1, Dec 31 Notes Payable Interest Expense Cash $32,800 13,500 $46,300 Year 2, Dec 31 Notes Payable Interest Expense Cash $35,752 10,548 $46,300 Year 3, Dec 31 Notes Payable Interest Expense Cash $38,970 7,330 $46,300 Year 4, Dec 31 Notes Payable Interest Expense Cash $42,478 3,822 $46,300 Answer(c) Interest Expense of $13,500 would be reported on the Income Statement