Question

On November 1, 2018, Norwood borrows $570,000 cash from a bank by signing a five-year installment note bearing 6% interest. The note requires equal payments of $135,315 each year on October 31. (Table B1, 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. 2Prepare the journal entries in which Norwood records the following: (a) Accrued interest as of December 31, 2018 (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. Req 2A and 2B Req 1 Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.) Ending Balance Debit Interest Expense +Debit Notes Payable Beginning Balance Period Ending Date =Credit Cash 10/31/2019 10/31/2020 10/31/2021 10/31/2022 10/31/2023 Total Req 2A and 2B Req 1

Answer 1

Answer

• Requirement 1

Period Ending Date	Beginning Balance	Debit Interest Expense	+ Debit Notes Payable	Credit Cash	Ending Balance
31-Oct-19	$570,000	$34,200	$101,115	$135,315	$468,885
31-Oct-20	$468,885	$28,133	$107,182	$135,315	$361,703
31-Oct-21	$361,703	$21,702	$113,613	$135,315	$248,090
31-Oct-22	$248,090	$14,885	$120,430	$135,315	$127,661
31-Oct-23	$127,661	$7,654	$127,661	$135,315	($0)
Total		$106,575		$676,575

--“Debit Interest Expense” = Beginning balance x 6%

• Requirement 2

Date	Accounts title	Debit	Credit
31-Dec-18	Interest Expense	$5,700
	Interest Payable		$5,700
	(to record 2 month interest accrued)
31-Oct-19	Notes Payable	$101,115
	Interest Expense	$28,500
	Interest Payable	$5,700
	Cash		$135,315
	(to record first payment)