Tony’s favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, “I’ve always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place.” On November 1, 2022, Great Adventures purchased the land by issuing a $500,000, 6%, 10-year installment note to the seller. Payments of $5,551 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $5,551 includes both interest expense and principal payments (i.e., reduction of the loan amount).

Late that night Tony exclaimed, “We now have land for our new camp; this has to be the best news ever!” Suzie said, “There’s something else I need to tell you. I’m expecting!” They decided right then, if it was a boy, they would name him Venture.

Required:

1. Complete the first three rows of an amortization schedule.

2. Record the purchase of land with the issuance of a long-term note payable on November 1, 2022.

3. Record the first two payments on November 30, 2022, and December 31, 2022, and calculate the remaining balance of the note payable as of December 31, 2022.

4. The 12 monthly payments in 2023 (following year) will reduce the note’s balance by an additional $38,014. How would the remaining balance of the note payable be reported in the balance sheet as of December 31, 2022?

The Great Adventures continuing problem also can be assigned using the General Ledger software in Connect. Students will be given an existing trial balance and asked to prepare:

(1) The journal entries for the transactions above in 2022,

(2) Financial statements, and

(3) Closing entries.