On November 1, 2018, Norwood borrows $200,000 cash from a bank by signing a five-year installment note
Question:
On November 1, 2018, Norwood borrows $200,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $50,091 each year on October 31.
Required
1. Complete an amortization table for this installment note similar to the one in Exhibit 10.12.
2. Prepare the journal entries in which Norwood records (a) accrued interest as of December 31, 2018 (the end of its annual reporting period), and (b) the first annual payment on the note.
Exhibit 10.12 Installment Note: Equal Total Payments Amortization Schedule Payments (A) (B) (C) (P) Credit (E) Debit Debit Ending Perlod Interest Notes Ending Date Expense Payable Cash Balance Beginning Balance 8% x (A) (D) - (B) (computed) (A) – (C) $ 18,482 $60,000 (1) 12/31/2018 (2) 12/31/2019. $4,800 $23,282 $41,518 21,557 41,518 3,321 19,961 23,282 21,557 $60,000 (3) 12/31/2020 21,557 1725 23,282 $9,846 $69,846 Decreasng Accrued Interest Equal Cash Payments Increasing Principal Component Interest Principal 2018 $4,800 $18,482 2019 $3,321 $19,961 2020 $1,725 $21,557 $5,000 $15,000 $25,000 End of Year
Step by Step Answer:
Background Amount of Payment given in the problem Note balance 200000 Number of periods ...View the full answer
Financial Accounting Information for Decisions
ISBN: 978-1259917042
9th edition
Authors: John J. Wild
Related Video
A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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