Problem 14-6A Installment notes LO C1 On November 1, 2017, Norwood borrows $600,
ID: 2551446 • Letter: P
Question
Problem 14-6A Installment notes LO C1
On November 1, 2017, Norwood borrows $600,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $150,274 each year on October 31. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)
Required:
1. Complete an amortization table for this installment note.
2. Prepare the journal entries in which Norwood records the following:
(a) Accrued interest as of December 31, 2017 (the end of its annual reporting period).
(b) The first annual payment on the note.
Req 1
Req 2A and 2B
Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.)
Journal entry worksheet
Record the interest accrued on the note as of December 31, 2017.
Note: Enter debits before credits.
Journal entry worksheet
Record the first installment payment on October 31, 2018. Assume no reversing entries were prepared.
Note: Enter debits before credits.
Explanation / Answer
1. Calculation of amortization table for this installment note
2. Journal entry
Pending date Beginning balance Debit interest Debit note payable Credit cash Ending balance 31/10/2018 600000 48000 102274 150274 497726 31/10/2019 497726 39818 110456 150274 387270 31/10/2020 387270 30982 119292 150274 267978 31/10/2021 267978 21438 128836 150274 139142 31/10/2022 139142 11131 139142 150274 0