Problem #3 (10 Marks): JDS Enterprises borrowed $120,000 on January 1, 2018 to purchase equipment. JDS signed a $120,000, 4%, 5-year promissory note. The loan requires that JDS pays an annual, blended interest payment of $26,955.25 every December 31 until the note has been repaid. The first payment was paid on December 31, 2018. Do all calculations to the nearest dollar:

Instructions

a) Calculate the interest and principal payments for the first three years. Prepare the journal entries to record the creation of the note and the installment payments on December 31, 2018 and 2019.

b) Prepare a partial balance sheet showing the presentation of the notes payable as of year- end, Dec. 31, 2018.