Entries forInstallment NoteTransactions

On January 1, Year 1, Bryson Company obtained a $12,000, four-year, 9% installment note from Campbell Bank. The note requires annual payments of $3,704, beginning on December 31, Year 1.

a.Prepare an amortization table for this installment note, similar to the one presented inExhibit 4.

Note: Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers. In Year 4, round the amount in theDecrease in Notes Payablecolumn either up or down to ensure that theCarrying Amountzeroes out.

Amortization of Installment Notes

Year Interest Expense

Ending January 1 Note Payment (9% of January 1. Decrease in December 31

December 31. Carrying Amount. (Cash Paid) Note Carrying Notes Payable. Carrying Amount

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. For the Year 4 entry (due to rounding), adjustNotes Payableup or down to ensure that debits equal credits.

Year 1 Jan. 1

Year 1 Dec. 31

Year 2 Dec. 31

Year 3 Dec. 31

Year 4 Dec. 31

c.How will the annual note payment be reported in the Year 1 income statement?

______________of $______________would be reported on the income statement.