On June 1, 2020, Ayayai Corporation approached Silverman Corporation about buying a parcel of undeveloped land. Silverman was asking $240,000 for the land and Ayayai saw that there was some flexibility in the asking price. Ayayai did not have enough money to make a cash offer to Silverman and proposed to give, in return for the land, a $305,000, five-year promissory note that bears interest at the rate of 4%. The interest is to be paid annually to Silverman Corporation on June 1 of each of the next five years. Silverman insisted that the note taken in return become a mortgage note. Silverman accepted the amended offer, and Ayayai signed a mortgage note for $305,000 due June 1, 2025. Ayayai would have had to pay 10% at its local bank if it were to borrow the cash for the land purchase. Silverman, on the other hand, could borrow the funds at 9%. Both Ayayai and Silverman have calendar year ends.

Assume that Silverman had insisted on obtaining an instalment note from Ayayai instead of a mortgage note. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PMT, calculate the amount of the instalment payments that would be required for a five-year instalment note. (Hint: Refer to Chapter 3 for tips on calculating.) Use the same cost of the land to Ayayai Corporation that you determined for the mortgage note in a previous part of the question. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 5,275.) Amount of the instalment $ 68512 Assume that Silverman had insisted on obtaining an instalment note from Ayayai instead of a mortgage note. Prepare an effective interest amortization table for the five-year term of the instalment note. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to decimal places, e.g. 5,275. Do not leave any answer field blank. Enter for amounts.) Instalment Note Payable Discount Amortized Note Carrying Am Date Cash Paid Interest Expense June 1 2020 $ June 1 2021 $ 68512 HA 12200 $ 56312 June 1 2022 68512 9948 58564 June 1 2023 68512 7605 60907 June 1 2024 68512 5169 63343 June 1 2025 68512 2638 65874 $ 37560 $ 305000 Prepare the journal entry for the purchase of the land and the issuance of the instalment note. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit June 1, Land 305000 2020 Notes Payable 305000 Prepare any adjusting journal entry that is required at the end of the fiscal year and the first payment made on June 1, 2021, assuming no reversing entries are used. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 Interest Expense 6100 Interest Payable 6100 June 1, 2021 Interest Expense 6100 Interest Payable 6100 Notes Payable 56312 Cash 68512 Instalment Note Payable Ayayai Corporation (Partial) Statement of Financial Position December 31, 2020 $