Question
On November 1, 2015, Norwood borrows $580,000 cash from a bank by signing a five-year installment note bearing 5% interest. The note requires equal total
On November 1, 2015, Norwood borrows $580,000 cash from a bank by signing a five-year installment note bearing 5% interest. The note requires equal total payments each year on October 31. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) |
Required: | |||||||
1. | Complete the below table to calculate the total amount of each installment payment. | ||||||
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2. | Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.) |
Period Ending Date | Beginning Balance | Debit Interest Expense | +Debit Notes Payable | =Credit Cash | Ending Balance |
10/31/2016 |
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10/31/2017 |
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10/31/2018 |
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10/31/2019 |
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10/31/2020 |
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Total |
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3. | Prepare the journal entries in which Norwood records the following: |
(a) | Accrued interest as of December 31, 2015 (the end of its annual reporting period). |
(b) | The first annual payment on the note. |
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