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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

a)

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

b)

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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