Question

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Exercise 14-19 (Algo) Installment note; lender; amortization schedule [LO14-3] nts FinanceCo lent $9.5 million to Corbin Construction on January 1, 2021, to construct a playground. Corbin signed a three-year, 8% installment note to be paid in three equal payments at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) eBook Required: 1. Prepare the journal entry for FinanceCo's lending the funds on January 1, 2021. 2. Prepare an amortization schedule for the three-year term of the installment note. 3. Prepare the journal entry for the first installment payment on December 31, 2021. 4. Prepare the journal entry for the third installment payment on December 31, 2023. Hint Complete this question by entering your answers in the tabs below. Ask Reg 2 Reg 1 3 and 4 Print Prepare an amortization schedule for the three-year term of the installment note. (Enter your answers in whole dollars.) eferences Dec. 31 Cash Payment Effective Interest Decrease in Balance Outstanding Balance 2021 2023 < Req2 Req 13 and 4 >

Answer 1

Finance Co lent $ 9.5 Mio to Corbin Construction on Jan 1,2021
Corbin signed a Three Year , 8% installmet Note to be paid in 3 Equal installment
at end of each year
In this Question, We need to pass couole of Journal , Amortization Table
1st Jan'21	Details	Debit($)	Credit($)
	Note Receivable	95,00,000
	Cash		95,00,000
Under above question . Most important to Note - Amortization Schedule
Date	Cash Payment(a)	Effective Interest(b)	Difference-Decrease(a-b)	Balance
1st Jan'21				95,00,000
31st Dec '21	36,86,318	7,60,000	29,26,318	65,73,682
31st Dec '22	36,86,318	5,25,895	31,60,424	34,13,258
31st Dec '23	36,86,318	2,73,061	34,13,258	-
Effective Interest rate 8%
Interest calculate on Outstanding Balance $ 9.5 Mio
To calculate Cash payment - need to derived Present value Method
Effective Interest rate 8%
Period = 3 Year
present value
Year1	0.93
Year2	0.86
Year3	0.79
Total Annuity	2.58
Instalment payment		36,86,318
(9.5 Mio/2.58)
After prepare Amortization table , we need to account through all JE
31st Dec '21
	Details	Debit($)	Credit($)
	Cash	36,86,318
	Note Receivable		29,26,318
	Interest revenue		7,60,000
31st Dec '22	Cash	36,86,318
	Note Receivable		31,60,424
	Interest revenue		5,25,895
31st Dec '23	Cash	36,86,318
	Note Receivable		34,13,258
	Interest revenue		2,73,061