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c. How will the annual note payment be reported in the Year 1 income statement? of $ would be reported on the income statement.

c. How will the annual note payment be reported in the Year 1 income statement? of $ would be reported on the income statement.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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chapter 10 question 3 

On January 1 of Year 1, Bryson Company obtained a $147,750, 4-year, 7% installment note from Campbell Bank. The note requires annual payments of $43,620, beginning on December 31 of Year 1. a. Prepare a table for this installment note, similar to the one presented in Exhibit 4. Enter all amounts as positive numbers. (Note: Due to rounding, the Year 4 Interest expense is provided.) Round the computation of the interest expense to the nearest whole dollar. If an amount box does not require an entry, leave it blank. Amortization of Installment Notes Interest Expense (7% of January 1 Note Carrying Amount) For the Year Ending Dec. 31 Year 1 Year 2 Year 3 Year 4 Feedback January 1 Carrying Amount Year 1 Jan. 1 Note Payment (Cash Paid) Year 1 Dec. 31 The book value of the note. Check My Work The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest. After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full. Decrease in December 31 Notes Payable Carrying Amount b. Journalize the entries for the issuance of the note and the four annual note payments. If an amount box does not require an entry, leave it blank. 3000 1000 UC
Transcribed Image Text:On January 1 of Year 1, Bryson Company obtained a $147,750, 4-year, 7% installment note from Campbell Bank. The note requires annual payments of $43,620, beginning on December 31 of Year 1. a. Prepare a table for this installment note, similar to the one presented in Exhibit 4. Enter all amounts as positive numbers. (Note: Due to rounding, the Year 4 Interest expense is provided.) Round the computation of the interest expense to the nearest whole dollar. If an amount box does not require an entry, leave it blank. Amortization of Installment Notes Interest Expense (7% of January 1 Note Carrying Amount) For the Year Ending Dec. 31 Year 1 Year 2 Year 3 Year 4 Feedback January 1 Carrying Amount Year 1 Jan. 1 Note Payment (Cash Paid) Year 1 Dec. 31 The book value of the note. Check My Work The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest. After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full. Decrease in December 31 Notes Payable Carrying Amount b. Journalize the entries for the issuance of the note and the four annual note payments. If an amount box does not require an entry, leave it blank. 3000 1000 UC
Year 1 Dec. 31 Year 2 Dec. 31 Year 3 Dec. 31 Year 4 Dec. 31 Feedback Check My Work The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest. After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full. Remember to review the reporting of current and long-term liabilities. The book value of the note. c. How will the annual note payment be reported in the Year 1 income statement? of $ would be reported on the income statement. Feedback Check My Work Incorrect
Transcribed Image Text:Year 1 Dec. 31 Year 2 Dec. 31 Year 3 Dec. 31 Year 4 Dec. 31 Feedback Check My Work The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest. After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full. Remember to review the reporting of current and long-term liabilities. The book value of the note. c. How will the annual note payment be reported in the Year 1 income statement? of $ would be reported on the income statement. Feedback Check My Work Incorrect
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