Question

In: Accounting

Shamrock Farms Ltd. needed financing to buy two John Deere tractors. Shamrock receives $250,000 on December...

Shamrock Farms Ltd. needed financing to buy two John Deere tractors. Shamrock receives $250,000 on December 31, 2021, when it issues a 10-year, 6% note payable. The terms provide for semi-annual blended instalment payments on June 30 and December 31 in the amount of $16,804.00.

(a)

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Prepare an instalment payment schedule for the first four interest periods. (Round answers to 2 decimal places, e.g. 5,276.25.)
SHAMROCK FARMS LTD.
Instalment Payment Schedule - Blended Payments
Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance
Dec. 31, 2021 $
June 30, 2022 $ $ $
Dec. 31, 2022
June 30, 2023
Dec. 31, 2023

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(b)

Prepare the journal entries to record the note payable and the first three instalment payments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 2 decimal places, e.g. 5,276.25.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2021

June 30, 2022

Dec. 31, 2022

June 30, 2023

Solutions

Expert Solution

Req a
Amort Chart
Period cash Interest Reduction in Principal
Payment Expense Principal balance
31.12.21 250000.00
30.06.22 16804.00 7500.00 9304.00 240696.00
31.12.22 16804.00 7220.88 9583.12 231112.88
30.06.23 16804.00 6933.39 9870.61 221242.27
31.12.23 16804.00 6637.27 10166.73 211075.53
Req b.
Journal entries
S.no. Accounts title and explanation Debit $ Credit $
31.12.21 Cash account 250000
    Notes payable 250000
(for amount borrowed)
30.06.22 Notes payable 9304
Interest expense 7500
     Cash account 16804
(for instalment paid)
31.12.22 Notes payable 9583.12
Interest expense 7220.88
     Cash account 16804
(for instalment paid)
30.06.23 Notes payable 9870.61
Interest expense 6933.39
     Cash account 16804
(for instalment paid)

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