Entries for Installment Note Transactions
On January 1, Year 1, Bryson Company obtained a $26,000,four-year, 12% installment note from Campbell Bank. The noterequires annual payments of $8,560, beginning on December 31, Year1.
a. Prepare an amortization table for thisinstallment note, similar to the one presented in Exhibit 4.
Note: Round the computation of the interestexpense to the nearest whole dollar. Enter all amounts as positivenumbers. In Year 4, round the amount in the Decrease in NotesPayable column either up or down to ensure that theCarrying Amount zeroes out.
b. Journalize the entries for the issuance ofthe note and the four annual note payments.
Note: For a compound transaction, if an amount box doesnot require an entry, leave it blank. For the Year 4 entry (due torounding), adjust Notes Payable up or down to ensure thatdebits equal credits.
c. How will the annual note payment be reported in the Year 1income statement?
of $ would be reported on the income statement.
