Question

Entries for Installment Note Transactions On January 1, Year 1, Bryson Company obtained a $32,000, four-year, 11% installment note from Campbell Bank. The note requires annual payments of $10,314, beginning on December 31, Year 1. a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Note: Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers. In Year 4, round the amount in the Decrease in Notes Payable column either up or down to ensure that the Carrying Amount zeroes out. Amortization of Installment Notes Year Ending December 31 January 1 Carrying Amount Note Payment (Cash Paid) Interest Expense (11% of January 1 Note Carrying Amount) Decrease in Notes Payable December 31 Carrying Amount Year 1 Year 2 Year 3 Year 4

Answer 1

				1-Jan	Note	intt expense	Decrease	31-Dec
Amortization of Installment Notes				Carrying	payment	11%	in	Carrying
Year ending December 31				amount	cash paid		notes payable	amount
year 1				32,000	10,314	3520	6,794	25,206
year 2				25,206	10,314	2773	7,541	17,665
year 3				17665	10,314	1943	8,371	9,294
year 4				9294	10,314	1020	9,294	0
b)		Journal Entries
	Date	Account titles & Explanations					Debit	Credit
year 1	1-Jan	Cash					32,000
		Notes payable						32,000
year 1	31-Dec	Interest expense					3520
		Notes payable					6,794
		cash						10,314
year 2	31-Dec	Interest expense					2773
		Notes payable					7,541
		cash						10,314
year 3	31-Dec	Interest expense					1943
		Notes payable					8,371
		cash						10,314
year 4	31-Dec	Interest expense					1020
		Notes payable					9,294
		cash						10,314
c)		3520	of	10,314	would be reported on income statement