Installment Loans

1. On January 1, 2023, Dyckman Plumbing Co. took out a 5-year installment loan at an annual interest rate of 6%. The loan required annual payments of $5,935 each year on December 31.

a. What was the amount that Dyckman Plumbing borrowed on January 1, 2023?

b. Prepare a journal entry to record the payment that Dyckman must make on December 31, 2023.

c. Prepare a loan amortization table for this loan.

d. What is the unpaid balance on the loan as of January 1, 2027?

2. On September 1, 2022, Hamilton Corporation borrowed $600,000 for 3 years at an annual rate of 8%. The loan required quarterly installment payments with the first payment due on November 30, 2022.

a. What is the amount of the quarterly payment that Hamilton must make?

b. Prepare a journal entry to record the first loan payment on November 30, 2022.

c. Prepare a year-end adjusting entry to record accrued interest for December 2022.

d. Prepare an entry to record the second payment, which is due on February 28, 2023.