Question

Entries for installment Note Transactions e The noter On January 1 Year 1 Bryson Company obtained a 22,000, four year, 12% installment note from Campbell B beginning on December 31 Year 1. esarmal payments of $7243 a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit Note: Round the computation of the interest expense to the r est whole dolar: Enter almos os positive numbers. In Year Decrease in Notes Payable column other up or down to ensure that the carrying Arount zeroes out Amortization of Installment Notes Year Ending December January 1 Carrying Amount Interest Expense (12 of January 1 Note Carrying Amount) Note Payment (Cash Paid) Carrying Decrease in Notes Payable Year 1 Year 4 b. Journalize the entries for the issuance of the note and the four annual note payments. (duets round dust Notes Payable on Note: For a compound transaction, an amount box does not require an entry leave it blank For the Year 4 down to ensure that debits equal credits Year 1 Jan 1

Answer 1

Solution a:

Amortization of Installment Note
Year Ending Dec 31	Jan 1, Carrying Amount	Note Payment (Cash Paid)	Interest expense (12% of Jan 1 carrying amount)	Decrease in note payable	Dec 31, carrying amount
Year 1	$22,000	$7,243	$2,640	$4,603	$17,397
Year 2	$17,397	$7,243	$2,088	$5,155	$12,242
Year 3	$12,242	$7,243	$1,469	$5,774	$6,468
Year 4	$6,468	$7,243	$775	$6,468	$0
		$28,972	$6,972	$22,000

Solution b:

Journal Entries - Bryson Company
Date	Particulars	Debit	Credit
Jan 1, Year 1	Cash Dr	$22,000.00
	To Notes Payable		$22,000.00
	(To record borrowing by issue of note)
Dec 31, Year 1	Interest expense Dr	$2,640.00
	Notes payable Dr	$4,603.00
	To Cash		$7,243.00
	(To record installment payment)
Dec 31, Year 2	Interest expense Dr	$2,088.00
	Notes payable Dr	$5,155.00
	To Cash		$7,243.00
	(To record installment payment)
Dec 31, Year 3	Interest expense Dr	$1,469.00
	Notes payable Dr	$5,774.00
	To Cash		$7,243.00
	(To record installment payment)
Dec 31, Year 4	Interest expense Dr	$775.00
	Notes payable Dr	$6,468.00
	To Cash		$7,243.00
	(To record installment payment)

Solution c:

Interest expense of $2,640 would be reported on the income statement.