Chapters 11 and 14 PERFORMANCE QUESTION 2 Excelsior Company issued a $48,000, 5
ID: 2335642 • Letter: C
Question
Chapters 11 and 14 PERFORMANCE QUESTION 2 Excelsior Company issued a $48,000, 5 year Instal annual interest rate of 6% and required annual payments (installments) of S11.395 until paid. lment Note to a vendor. The Installment Note had an A. Determine the interest and principal portion of the fixed annual payments for year 1 and year 2 ot the Installment Note using the partial payment schedule below: Reduction Remaining Portion DATE Carrying Amount Principal Required Annual Installment Carrying Amount Portion Year 1 Year 2 Year 3 B. Prepare the journal entry to record the initial installment payment for year 1. C. Prepare the journal entry to record the installment payment for year 2. D. What is the carrying amount of the note for year 3?Explanation / Answer
A Date Carrying amount Required annual installment Interest portion Principal reduction Remaining Carrying amount Year 1 48000 11395 2880 8515 39485 Year 2 39485 11395 2369 9026 30459 Year 3 30459 11395 1828 9567 20892 B Year 1 Interest expense 2880 Notes payable 8515 Cash 11395 C Year 2 Interest expense 2369 Notes payable 9026 Cash 11395 D Carrying amount of the note for Year 3 is $30459