Question

Tony’s favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, “I’ve always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place.” On November 1, 2022, Great Adventures purchased the land by issuing a $590,000, 6%, 10-year installment note to the seller. Payments of $6,550 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $6,550 includes both interest expense and principal payments (i.e., reduction of the loan amount).

Late that night Tony exclaimed, “We now have land for our new camp; this has to be the best news ever!” Suzie said, “There’s something else I need to tell you. I’m expecting!” They decided right then, if it was a boy, they would name him Venture.

Required:

1. Complete the first three rows of an amortization schedule.

	Date Cash Paid Interest Expense Change in Carrying Value Carrying Value 11/01/2022 11/30/2022 12/31/2022

2. Record the purchase of land with the issuance of a long-term note payable on November 1, 2022, and the first two payments on November 30, 2022, and December 31, 2022, and calculate the remaining balance of the note payable as of December 31, 2022. (If no entry is required for a particular transaction, select "No Journal Entry Required" in the first account field.)

Record the issuance of note payable.

Record the monthly payments.

Answer 1

Answers

[1]

Date	Cash Paid	Interest Expense	Change in Carrying Value	Carrying Value
11-01-2022				$590,000
11/30/2022	$6,550	$2,950	$3,600	$586,400
12/31/2022	$6,550	$2,932	$3,618	$582,782

[2]

Date	Accounts title	Debit	Credit
11-01-2022	Land	$590,000
	Notes Payable		$590,000
	(to record issuance)
11/30/2022	Interest Expense	$2,950
	Notes Payable	$3,600
	Cash		$6,550
12/31/2022	Interest Expense	$2,932
	Notes Payable	$3,618
	Cash		$6,550

[3]

Remaining balance of Notes Payable on Dec 31, 2022 = $ 582,782