Question 4 (12 marks, 22 minutes) Part A (8 marks) On November 1, 2009 K & S Developments Ltd. purchased a piece of land for $520,000, paying $40,000 in cash and issuing a note payable for the remainder. The note bears interest at 8% and is to be repaid in monthly fixed principal repayments of $10,000 for the next 4 years. K & S has a December 31 year end.

Required:

1) Calculate the amount of the first cash payment to be made on the note on December 1, 2009.

2) Prepare the journal entry to record the first payment on December 1, 2009

3) What amount of interest expense will be shown on the Statement of Earnings for the year ended December 31, 2009 relating to this note?

4) What amount will be shown in the Current Liabilities section of the balance sheet on December 31, 2009, relating to this note?