Ex 14-12 Entries for installment note transactions ObJ. 4 On January 1, 2016, Bryson Company obtained...

Ex 14-12 Entries for installment note transactions ObJ. 4 On January 1, 2016, Bryson Company obtained a $147,750, four-year, 7% installment note from Campbell Bank. The note requires annual payments of $43,620, beginning on December 31, 2016. a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. b. Journalize the entries for the issuance of the note and the four annual note payments. c. Describe how the annual note payment would be reported in the 2016 income statement.

Solutions

Expert Solution

Year	Payment	Interest	principal	carrying value at end
1jan 2016				147750
31 dec 2016	43620	10342.5 [147750*.07]	33277.5 [43620-10342.5]	147750-33277.5= 114472.5
31 dec 2017	43620	8013.08 [114472.5*.07]	35606.92	78865.58 [114472.5-35606.93]
31 dec 2018	43620	5520.59	38099.41	40766.17
31 dec 2019	43620	2853.83	40766.17	0

Date	Account title	Debit	credit
1 jan 2016	cash	147750
	Note payable		147750

31 dec 2016	Interest expense	10342.5
	Note payable	33277.5
	cash		43620

31 Dec 2017	Interest expense	8013.08
	Note payable	35606.92
	cash		43620

31 dec 2018	Interest expense	5520.59
	Note payable	38099.41
	cash		43620

31dec 2019	Interest expense	2853.83
	Note payable	40766.17
	cash		43620

C)Interest expense will be reported on Income statement as $ 10342.5

ekkarill92 answered 1 year ago

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