Question

PROBLEM On January 1, 2019, Pons, Inc. issued a 296 installment note to Green Bank in the amount of 10,000. The not require annual payment for 4 years Determine the amount of the animal payment, and write your answer on this line Round to the nearest whole dollar when necessary You must show your work in the space provided below for any credit to be awarded Use the present value table provided in class (also posted in our course D2L shell with the CH14 materials) to make the calculation (Use the numbers ictly as they appear in the table.) Record the annual payments that will be made each December 31

Answer 1

Solution of Problem 2 Amount of Note (A) P.V @ 2%,n=4 (B) Amount of Annual Instalment (A/B) 190000 3.80773 49898 Year Carrying Amount Note Payment (A) Interest @ 2% on carrying value (B) Reduction of Principal (A-B ) = ( C) 1/1/2019 12/31/2019 12/31/2020 12/31/2021 12/31/2022 49898 49898 49898 49898 3800 2878 1938 978 46098 47020 47961 48920 190000 143902 96881 48920 Credit Date Account title & explanation 55 12/31/2019 Interest expense Notes Payable Cash (To record first instalment payment) Debit 3800 46098 49898 2878 47020 60 12/31/2020 Interest expense 61 Notes Payable 62 Cash (To record second instalment payment) 49898

1938 47961 65 12/31/2021 Interest expense 66 Notes Payable 67 Cash (To record third instalment payment) 49898 68 70 71 978 48920 12/31/2022 Interest expense Notes Payable Cash (To record fourth instalment payment) 72 49898 73

Solution of Problem 3 As Bamboo Corporation has redeemed one quarter of the bonds we will first of all calculate th value of Bonds Payable and Discount on Bonds Payable accordingly 113 114 115 116 117 118 119 120 121 122 123 Bonds Payable (180000 *1/4) Discount on Bonds Payable (19000 *1/4) 45000 4750 Credit Debit 45000 5200 124 Date Account title & explanation 28-Feb Bonds Payable Loss on Redemption of Bonds Payable Discount on Bonds Payable Cash (45000*101/100) (To record redemption of Bonds Payable) 125 126 127 4750 45450 128