On August 1, 2019, Jill borrowed $90,000 at 5% from Jack and agreed to make annual...

On August 1, 2019, Jill borrowed $90,000 at 5% from Jack and agreed to make annual payments of $20,788 for 5 years.

Complete the amortization table below. Round all calculations to the nearest dollar.
Prepare all necessary journal entries to record the receipt of funds, adjusting entries at year end and the first payment.


	Beginning Principal Balance	Payment	Interest	Principal Reduction	Ending Principal Balance

20X1	90,000	20,788	4,500	16,288	73,712
20X2					56,610
20X3					38,652
20X4					19,797
20X5	19,797	20,788	990	19,798	(1)

August 1, 2019: Record receipt of Loan Funds

December 31, 2019: Record year end interest accrual

July 31, 2020: Record payment

Expert Solution

Solution:1

REPAYEMETNT SCHEDULE
	December.31	Beginning Principal Balance	Note Payament (Cash Paid )	Interest Expenses 5%	Decrease in note Payable	December. 31 Carrying Amount
	20X1	$ 90,000	$ 20,788	$ 4,500	$ 16,288	$ 73,712
	20X2	$ 73,712	$ 20,788	$ 3,686	$ 17,102	$ 56,610
	20X3	$ 56,610	$ 20,788	$ 2,831	$ 17,957	$ 38,653
	20X4	$ 38,653	$ 20,788	$ 1,933	$ 18,855	$ 19,798
	20X5	$ 19,798	$ 20,788	$ 990	$ 19,798	$ -
Solution: 2

Journal Entries
Date	Account Title and explanation	Debit	Credit

Aug 01. 2019	Cash	$ 90,000
	Note Payable		$ 90,000



Dec 31. 2019	Interest Expenses($ 90,000 X 5% X5/12)	1875
	Interest Payable		1875



July 31. 2020	Interest Expenses	$ 2,625
	Interest Payable	$ 1,875
	Note Payable	$ 16,288
	Cash		$ 20,788

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