Question

On November 1, 2017, Norwood borrows $590,000 cash from a bank by signing a five-year installment note bearing 7% interest. The note requires equal payments of $143,895 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. Complete this question by entering your answers in the tabs below. . . Reqi Reg 2A and 2B Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.) Period Ending Date D Beginning Beginning Balance Debit Interest Debit Interest Expense Ending = Credit Cash 0 Debit Notes Payable Balance 0 1 10/31/2018 10/31/2019 10/31/2020 10/31/2021 10/31/2022 Total or SC 0 TL SI TL I TIL 1 - Reg 2A and 28 >

Answer 1

SOLUTION : 1(A)
Period Ending Date	Beginning Balance	Debit interest Expenses	+ Debit Notes Payable	= Credit Cash	Ending Balance
10/31/2018	$                                                                      5,90,000	$                  41,300	$                 1,02,595	$              1,43,895	$       4,87,405
10/31/2019	$                                                                      4,87,405	$                  34,118	$                 1,09,777	$              1,43,895	$       3,77,628
10/31/2020	$                                                                      3,77,628	$                  26,434	$                 1,17,461	$              1,43,895	$       2,60,167
10/31/2021	$                                                                      2,60,167	$                  18,212	$                 1,25,683	$              1,43,895	$       1,34,484
10/31/2022	$                                                                      1,34,484	$                     9,414	$                 1,34,481	$              1,43,895	$                     0
SOLUTION : 1(B)
Journal Entries
Date	Account Title and explanation	Debit	Credit
Dec 31, 2017	Interest Expenses ($ 590,000 X 7% X 2/12)	$                     6,883
	Interest Payable		$                       6,883
Oct 31, 2018	Interest Expenses ($ 590,000 X 7% X 10/12)	$                  34,417
	Interest Payable	$                     6,883
	Note Payable	$               1,02,595
	Cash		$                 1,43,895