Question

Problem 10-6A Installment notes LO C1

On November 1, 2017, Norwood borrows $410,000 cash from a bank by signing a five-year installment note bearing 9% interest. The note requires equal payments of $105,407 each year on October 31. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

Required:

1. Complete an amortization table for this installment note.
2. Prepare the journal entries in which Norwood records the following:
(a) Accrued interest as of December 31, 2017 (the end of its annual reporting period).
(b) The first annual payment on the note.

Complete this question by entering your answers in the tabs below.

• Req 1
• Req 2A and 2B

Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.)

Period Ending Date	Beginning Balance	Debit Interest Expense	+ Debit Notes Payable	= Credit Cash	Ending Balance
10/31/2018
10/31/2019
10/31/2020
10/31/2021
10/31/2022
Total

• Req 1

req 2

Prepare the journal entries in which Norwood records for accrued interest as of December 31, 2017 (the end of its annual reporting period) and the first annual payment on the note.

Answer 1

1
Period Ending Date	Beginning Balance	Debit Interest Expense	+ Debit Notes Payable	= Credit Cash	Ending Balance
10/31/2018	410000	36900	68507	105407	341493
10/31/2019	341493	30734	74673	105407	266820
10/31/2020	266820	24014	81393	105407	185427
10/31/2021	185427	16688	88719	105407	96708
10/31/2022	96708	8699	96708	105407	0
Total		117035	410000	527035
2
Date	General Journal	Debit	Credit
Dec 31,2017	Interest expense	6150		=410000*9%*2/12
	Interest payable		6150
Oct. 31,2018	Interest expense	30750		=410000*9%*10/12
	Interest payable	6150
	Notes payable	68507
	Cash		105407