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.” They called several banks and on January 1, 2020, Great Adventures obtained a $560,000, 6%, 10-year installment loan from Summit Bank. Payments of $6,217 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $6,217 includes both interest expense and principal payments (i.e., reduction of the loan amount).

  Late that night Tony exclaimed, “$560,000 for our new camp, this has to be the best news ever.” Suzie snuggled close and said, “There’s something else I need to tell you, Tony, 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 table.

Date	Cash Paid	Interest Expense	Decrease in Carrying Value	Carrying Value
01/01/2020
01/31/2020
02/28/2020

2. Record the note payable on January 1, 2020, and the first two payments on January 31, 2020, and February 28, 2020. (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 payment.
Record the monthly payment.

Answer 1

Date	Cash Paid	Interest Expense	Decrease in Carrying Value	Carrying Value
01/01/2020				560000
01/31/2020	6217	2800	3417	556583
02/28/2020	6217	2783	3434	553149
2
January 1, 2020	Cash	560000
	Notes Payable		560000
January 31, 2020	Interest Expense	2800		=560000*6%*1/12
	Notes Payable	3417
	Cash		6217
February 28, 2020	Interest Expense	2783		=556583*6%*1/12
	Notes Payable	3434
	Cash		6217