QUESTION 2-1 (15 marks):

On December 31, 2021, Almonte Corporation borrowed $100,000 by signing an 8% note that is to be repaid in 4 annual fixed principal repayments, the first of which is due on December 31, 2022.

REQUIRED:

(a) Prepare a journal entry to record the initial borrowing of the money.

(b) Assume that the payments are to consist of accrued interest plus fixed principal payments. Prepare general journal entries to record the first and second installment payments.

(c) What amount should be shown as a current liability at December 31, 2022?

(d) What amount should be shown as a long-term liability at December 31, 2022?

(e) Contrary to the assumption in (b) above, assume now that the note requires blended installment payments of $30,192. Prepare the general journal entry to record the first installment payment.