Question

In: Accounting

On January 1, Year 1, Bryson Company obtained a $39,000, four-year, 10% installment note from Campbell...

On January 1, Year 1, Bryson Company obtained a $39,000, four-year, 10% installment note from Campbell Bank. The note requires annual payments of $12,303, beginning on December 31, Year 1.

a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4.

Note: Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers. In Year 4, round the amount in the Decrease in Notes Payable column either up or down to ensure that the Carrying Amount zeroes out.

Amortization of Installment Notes

Year Ending
December 31

January 1
Carrying Amount

Note Payment
(Cash Paid)

Interest Expense
(10% of January 1
Note Carrying
Amount)

Decrease in
Notes Payable

December 31
Carrying Amount

Year 1

$fill in the blank 5cffd20c4f9cfe8_1

$fill in the blank 5cffd20c4f9cfe8_2

$fill in the blank 5cffd20c4f9cfe8_3

$fill in the blank 5cffd20c4f9cfe8_4

$fill in the blank 5cffd20c4f9cfe8_5

Year 2

fill in the blank 5cffd20c4f9cfe8_6

fill in the blank 5cffd20c4f9cfe8_7

fill in the blank 5cffd20c4f9cfe8_8

fill in the blank 5cffd20c4f9cfe8_9

fill in the blank 5cffd20c4f9cfe8_10

Year 3

fill in the blank 5cffd20c4f9cfe8_11

fill in the blank 5cffd20c4f9cfe8_12

fill in the blank 5cffd20c4f9cfe8_13

fill in the blank 5cffd20c4f9cfe8_14

fill in the blank 5cffd20c4f9cfe8_15

Year 4

fill in the blank 5cffd20c4f9cfe8_16

fill in the blank 5cffd20c4f9cfe8_17

fill in the blank 5cffd20c4f9cfe8_18

fill in the blank 5cffd20c4f9cfe8_19

0

$fill in the blank 5cffd20c4f9cfe8_20

$fill in the blank 5cffd20c4f9cfe8_21

$fill in the blank 5cffd20c4f9cfe8_22

b. Journalize the entries for the issuance of the note and the four annual note payments.

Note: For a compound transaction, if an amount box does not require an entry, leave it blank. For the Year 4 entry (due to rounding), adjust Notes Payable up or down to ensure that debits equal credits.

Year 1 Jan. 1	fill in the blank a0c0bef69fa507c_2
		fill in the blank a0c0bef69fa507c_4
Year 1 Dec. 31	fill in the blank a0c0bef69fa507c_6	fill in the blank a0c0bef69fa507c_7
	fill in the blank a0c0bef69fa507c_9	fill in the blank a0c0bef69fa507c_10
	fill in the blank a0c0bef69fa507c_12	fill in the blank a0c0bef69fa507c_13
Year 2 Dec. 31	fill in the blank a0c0bef69fa507c_15	fill in the blank a0c0bef69fa507c_16
	fill in the blank a0c0bef69fa507c_18	fill in the blank a0c0bef69fa507c_19
	fill in the blank a0c0bef69fa507c_21	fill in the blank a0c0bef69fa507c_22
Year 3 Dec. 31	fill in the blank a0c0bef69fa507c_24	fill in the blank a0c0bef69fa507c_25
	fill in the blank a0c0bef69fa507c_27	fill in the blank a0c0bef69fa507c_28
	fill in the blank a0c0bef69fa507c_30	fill in the blank a0c0bef69fa507c_31
Year 4 Dec. 31	fill in the blank a0c0bef69fa507c_33	fill in the blank a0c0bef69fa507c_34
	fill in the blank a0c0bef69fa507c_36	fill in the blank a0c0bef69fa507c_37
	fill in the blank a0c0bef69fa507c_39	fill in the blank a0c0bef69fa507c_40

c. How will the annual note payment be reported in the Year 1 income statement?
of $fill in the blank 4b0e5904d024042_2 would be reported on the income statement.

Expert Solution

a) Ammortization of Installment Notes

Year Ending December 31	January 1 Carrying Amount	Note Payment (Cash Paid)	Interest expennse(10% of January 1 Note Carrying Amount)	Decrease in Notes Payable	December 31 Carrying Amount
Year 1	$39,000	$12,303	$3,900	$8,403	$30,597
			(10%x39000)	(12303-3900)	(39000-8403)
Year 2	$30,597	$12,303	$3,060	$9,243	$21,354
			(10%x30597)	(12303-3060)	(30597-9243)
Year 3	$21,354	$12,303	$2,135	$10,168	$11,186
			(10%x21354)	(12303-2135)	(21354-10168)
Year 4	$11,186	$12,303	$1,117	$11,186	0
			(12303-11186)	(12303-11186)	(11186-11186)

b) Journal Entries

Date	Accounts	Debit	Credit
Year 1 Jan 1	Cash	$39,000
	Notes Payable		$39,000

Year 1 Dec 31	Notes Payable	$8,403
	Interest Expense	$3,900
	Cash		$12,303

Year 2 Dec 31	Notes Payable	$9,243
	Interest Expense	$3,060
	Cash		$12,303

Year 3 Dec 31	Notes Payable	$10,168
	Interest Expense	$2,135
	Cash		$12,303

Year 4 Dec 31	Notes Payable	$11,186
	Interest Expense	$1,117
	Cash		$12,303

c)$3,900 of $12,303 would be reported on the income statement as interest expense.

ekkarill92 answered 1 year ago

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