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 $410,000, 6%, 9-year installment loan from Summit Bank. Payments of $4,922 are required at the end of each month over the life of the 9-year loan. Each monthly payment of $4,922 includes both interest expense and principal payments (i.e., reduction of the loan amount).

  Late that night Tony exclaimed, “$410,000 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.)

Answer 1

1) Schedule :

Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 01/01/2020 410000 01/31/2020 4922 410000*6%*1/12 = 2050 2872 407128 02/28/2020 4922 407128*6%*1/12 = 2035.64 2886.36 404241.64

Journal entry :

Date	accounts & explanation	debit	credit
Jan 1,2020	Cash	410000
	Notes payable		410000
	(To record note payable)
Jan 30,2020	Interest expense	2050
	Notes payable	2872
	Cash		4922
	(To record installment paid)
Feb 28,2020	Interest expense	2035.64
	Notes payable	2886.36
	Cash		4922
	(To record installment paid)