On January 1, Year 1, Bryson Company obtained a $147,750, four-year, 7% installment note from Campbell Bank. The note requires annual payments of $43,620, beginning on December 31, Year 1. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Journalize the entries for the issuance of the note and the four annual note payments. Describe how the annual note payment would be reported in the Year 1 income statement.

Question

contestada

Respuesta :

andromache andromache · Answer 1 · 2020-05-31T07:19:37+02:00

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

1) The amortization schedule is presented on the attachment below:

2).

Journal Entry

1 Jan Cash A/c Dr. $147,750

To Notes payable A/c $147,750

(Being the cash received is recorded)

31 Dec Interest expense A/c Dr. $10,342.50

Notes payable A/c $33,277.50

To Cash A/c $43,620

(Being the annual payment of installment including interest is recorded)

31 Dec Interest expense A/c Dr. $8,013.08

Notes payable A/c $33,606.93

To Cash A/c $43,620

(Being the annual payment of installment including interest is recorded)

31 Dec Interest expense A/c Dr. $5,520.59

Notes payable A/c $38,099.41

To Cash A/c $43,620

(Being the annual payment of installment including interest is recorded)

31 Dec Interest expense A/c Dr. $2,853.83

Notes payable A/c $40,766.17

To Cash A/c $43,620

(Being the annual payment of installment including interest and setting off liabilities is recorded)

3).

Bryson Company

Income Statement

Particular Amount ($)

Revenue -

Expenses

Less - Interest expense 10,342.50

Less - Other expenses -

Net Income -