Question

ACT 210-ACCOUNTING FOR FINANCIAL DECISION MAKING IN-CLASS ACTIVITY-CHAPTER 12 LONG TERM LIABILITIES PROBLEM 1 Builders Corp signed a $50,000 note payable on December 31, 2017. The note will be paid over 5 years with payments of $10,000 plus 7% interest due each December 31, beginning December 31, 2018. Required Journalize the issuance of the note on December 31, 2017. 1. Accounts and Explanation Credit Debit Date 2. Complete below Long-term Notes Payable Amortization Schedule Beginning Principal Payment Interest Ending Balance Total Balance Expense Payment 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Total $50,000 $50,000 3. Journalize Builders Corp's December 31, 2018 first installment payment plus interest on the note. Date Accounts Debit Credit 1 |Page

Answer 1

Requirement 1:

Credit Date Dec. 31, 2017 Accounts and Explanation Cash Notes Payable Debit 50,000 50,000

Requirement 2:

Beginning Principal Interest Total Ending Balance Payment | Expense | Payment | Balance 12/31/2017 $ 50,000 12/31/2018 $ 50,000 $ 10,000 $ 3,500 $ 13,500 $ 40,000 12/31/2019 $ 40,000 $ 10,000 $ 2,800 $ 12,800 $ 30,000 12/31/2020 $ 30,000 $ 10,000 $ 2,100 $ 12,100 $ 20,000 12/31/2021 $ 20,000 $ 10,000 $ 1,400 $ 11,400 $ 10,000 | 12/31/2022 $ 10,000 $ 10,000 $ 700 $ 10,700 $ . Total $ 50,000 $ 10,500 $ 60,500

Requirement 3:

Credit Date Dec. 31, 2018 Accounts and Explanation Notes Payable Interest Expense Cash Debit 10,000 3,500 13,500