Question

Dandy Candy bought a delivery vehicle for $45,000 by issuing an 8% installment note on January 1, 2021. Dandy will make 12 monthly payments of $3,914.50 at the end of each month.

	Cash		Reduction of	Note
Period	Payment	Interest Exp	Note Payable	Payable
	(Credit)	(Debit)	(Debit)	Balance
At issue	---	---	---	$45,000.00
01/31/21	$3,914.50	$300.00	$3,614.50	41,385.50
02/28/21	3,914.50	?	?	?
03/31/21	3,914.50	?	?	?
04/30/21	3,914.50	?	?	?
05/31/21	3,914.50	?	3,711.85	26,684.93

	Required:
	Using the partially completed amortization table above, prepare the journal entries for the end of March and the end of April.

Answer 1

	Cash		Reduction of	Note
Period	Payment	Interest Exp	Note Payable	Payable
	(Credit)	(Debit)	(Debit)	Balance
	[A]	[B = Last 'D' x 8% x 1/12]	[C = A - B]	[D = Last 'D' - C]
At issue	---	---	---	$45,000.00
01/31/21	$3,914.50	$300.00	$3,614.50	$41,385.50
02/28/21	$3,914.50	$275.90	$3,638.60	$37,746.90
03/31/21	$3,914.50	$251.65	$3,662.85	$34,084.05
04/30/21	$3,914.50	$227.23	$3,687.27	$30,396.78
05/31/21	$3,914.50	$202.65	$3,711.85	$26,684.93

--

Date	Accounts title	Debit	Credit
03/31/21	Notes Payable	$3,662.85
	Interest Expense	$251.65
	Cash		$3,914.50
04/30/21	Notes Payable	$3,687.27
	Interest Expense	$227.23
	Cash		$3,914.50