Question

A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1,...

A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, 2018, is shown as follows.

Accounting
Period		 Principal
Balance January 1		 Cash
Payment		 Applied to
Interest		 Applied to
Principal
2018 $ 133,000 $ 34,193 $ 11,970 $ 22,223
2019 110,777 34,193 9,970 24,223
2020 86,554 34,193 7,790 26,403

  1. Using a financial statements model like the one shown, record the appropriate amounts for the following two events: (Enter any decreases to account balances and cash outflows with a minus sign. In the Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), financing activities (FA), or if there is no effect, leave the cell blank.)

  1. (1) January 1, 2018, issue of the note payable.

  2. (2) December 31, 2018, payment on the note payable.

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Answer #1
Event Date Balance Sheet Income Statement Cash flow
Asset = Liabilities + Equity Revenue - Expense = Net income
( 1 ) January 1,2018           133,000 = 133,000 130,000 FA
( 2 ) December 31,2018             -34,193 =     -22,223 + -11,970    11,970 =        -11,970 11,970 OA
22,223 FA
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