10.3 fill in the blanks that are supposed to be filled. Entries for installment note transactionsOn 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 ofYear 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 NotesInterest Expense(7% of January 1Note Carrying Amount)10,343For the YearEnding Dec. 31Year 1Year 2Year 3Year 4FeedbackJanuary 1Carrying Amount147,750114,47378,866Note Payment(Cash Paid)43,62043,62043,62043,6208,0135,521Decrease inNotes Payable$35,60738,099December 31Carrying Amount$ 114,47378,8660Check My WorkThe 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 decreaseseach 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. Year 3 Dec. 31 Interest ExpenseNotes PayableCashYear 4 Dec. 31 Interest ExpenseNotes PayableCashFeedback5,52138,099XX43,620X▼ Check My WorkThe 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 decreaseseach 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.c. How will the annual note payment be reported in the Year 1 income statement?Interest expenseof $ 10,343would be reported on the income statement.

The question is based on the concept of Financial Accounting. A note can be defined as a debt…

Entries for installment note transactions 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 blank. Amortization of Installment Notes Interest Expense (7% of January 1 Note Carrying Amount) 10,343 ✔ 8,013 5,521 For the Year Ending Dec. 31 Year 1 Year 2 Year 3 January 1 Carrying Amount 147,750 ✔ 114,473 ✔ 78,866 ✔ Note Payment (Cash Paid) 43,620 ✔ 43,620 43,620 ✓ ✓ Decrease in Notes Payable 35,607 ✔ 38,099 ✓ December 31 Carrying Amount $ 114,473 ✔ 78,866 ✔

Entries for installment note transactions 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 blank. Amortization of Installment Notes Interest Expense (7% of January 1 Note Carrying Amount) 10,343 ✔ 8,013 5,521 For the Year Ending Dec. 31 Year 1 Year 2 Year 3 January 1 Carrying Amount 147,750 ✔ 114,473 ✔ 78,866 ✔ Note Payment (Cash Paid) 43,620 ✔ 43,620 43,620 ✓ ✓ Decrease in Notes Payable 35,607 ✔ 38,099 ✓ December 31 Carrying Amount $ 114,473 ✔ 78,866 ✔

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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