Entries for Installment Note Transactions

On January 1, Year 1, Bryson Company obtained a $32,000, four-year, 11% installment note from Campbell Bank. The note requires annual payments of $10,314, beginning on December 31, Year 1.

Question Content Area

a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Note: Enter all amounts to the nearest whole dollar.

Amorization of Instatllment Notes

Interest Expense

(11% of Jan.

Year ending Jan. 1 Note Payment Note Carrying Decrease in December 31

December 31 Carrying amt (cash paid) amount) Notes Payable Carrying amount

Year 1

Year 2

Year 3

Year 4

b. Journalize the entries for the issuance of the note and the four annual note payments. Note: For a compound transaction, if an amount box does not require an entry, leave it blank.

Year 1 Jan. 1 Cash

Notes Payable

Year 1 Dec. 31 Interest Expense

Notes payable

Cash

year 2 Dec. 31 Interest expense

Notes Payable

Cash

Year 3 Dec. 31 Interest Expense

Notes payable

Cash

Year 4 Dec. 31 Interest Expense

Notes Payable

Cash

c. How will the annual note payment be reported in the Year 1 income statement? of $fill in the blank 5f9fc8f6900afe9_2 would be reported on the income statement. of $ Would be reported on the income statement.