The following journal entry was made by your predecessor to record the annual payment on a 5%, 10-year installment note.

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JOURNAL

ACCOUNTING EQUATION

DATE: DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

Oct. 1 Interest Expense 710 227,040.00

Notes Payable 215 475,522.00

Cash 110 702,562.00

Using the information provided, compute the following amounts.

1. What was the carrying amount (book value) of the installment note before the payment on October 1?

2. What portion of next year's payment will be interest? (Round the amount to the nearest dollar.)