On June 1, 2020, Whispering Winds Corporation approached Silverman Corporation about buying a parcel of undeveloped land. Silverman was asking $258,000 for the land and Whispering Winds saw that there was some flexibility in the asking price. Whispering Winds did not have enough money to make a cash offer to Silverman and proposed to give, in return for the land, a $315,000, five-year promissory note that bears interest at the rate of 5%. 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 Whispering Winds signed a mortgage note for $315,000 due June 1, 2025. Whispering Winds 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 Whispering Winds and Silverman have calendar year ends.

1.

2.

3.

4.

Assume that Silverman hed insisted on obtaining an instalment note from Whispering Winds 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 Whispering Winds 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 decimal places, eg. 5,275.) Amount of the instalment S Assume that Silverman had insisted on obtaining an instalment note from Whispering Winds 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, eg. 1.25124 and final answers to decimal places, eg,5,275. Do not leave any answer field blank. Enter for amounts.) Instalment Note Payable Discount Note Cash Paid Interest Expense Amortized Carrying Amount $ $ $ $ Prepare the journal entry for the purchase of the land and the issuance of the instalment note. (Round answers to decimal places, eg. 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 for the amounts.) Debit Credit Date Account Titles and Explanation June 1, 2020 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 decimal places, eg. 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 entero for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 June 1, 2021 Instalment Note Payable Whispering Winds Corporation (Partial) Statement of Financial Position $