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On January 1, 2019, Eagle Company borrows $21,000 cash by signing a four-year, 5% installment note. The note requires four equ payments of $5,922, consisting of accrued interest and principal on December 31 of each year from 2019 through 2022. Prepare an amortization table for this installment note. (Round all amounts to the nearest whole dollar.) Payments (A) (B) Debit Interest Expense (C) (E) Ending Balance (D) Period Ending Beginning Balance Debit Notes Credit Cash Date Payable 2019 2020 2021 2022 Total

On January 1, 2019, Eagle Company borrows $21,000 cash by signing a four-year, 5% installment note. The note requires four equ payments of $5,922, consisting of accrued interest and principal on December 31 of each year from 2019 through 2022. Prepare an amortization table for this installment note. (Round all amounts to the nearest whole dollar.) Payments (A) (B) Debit Interest Expense (C) (E) Ending Balance (D) Period Ending Beginning Balance Debit Notes Credit Cash Date Payable 2019 2020 2021 2022 Total

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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### Amortization Table Preparation **Context:** On January 1, 2019, Eagle Company borrows $21,000 cash by signing a four-year, 5% installment note. The note requires four equal payments of $5,922, consisting of accrued interest and principal, payable on December 31 each year from 2019 through 2022. **Objective:** Prepare an amortization table for this installment note. (Round all amounts to the nearest whole dollar.) **Amortization Table:** | Period Ending Date | (A) Beginning Balance | (B) Debit Interest Expense | (C) Debit Notes Payable | (D) Credit Cash | (E) Ending Balance | |--------------------|-----------------------|----------------------------|-------------------------|-----------------|-------------------| | 2019 | | | | | | | 2020 | | | | | | | 2021 | | | | | | | 2022 | | | | | | | Total | | | | | | **Explanation:** - **Period Ending Date:** The year at the end of which the payment is made. - **(A) Beginning Balance:** The balance of the installment note at the beginning of the period. - **(B) Debit Interest Expense:** The interest cost accrued during the period. - **(C) Debit Notes Payable:** The portion of the payment that reduces the principal balance. - **(D) Credit Cash:** The total payment made, which is consistent at $5,922 each year. - **(E) Ending Balance:** The balance of the installment note at the end of the period after the payment is applied. This table helps understand how much of each payment goes toward interest versus reducing the principal balance, providing insight into the reduction of debt over time.
Transcribed Image Text:### Amortization Table Preparation **Context:** On January 1, 2019, Eagle Company borrows $21,000 cash by signing a four-year, 5% installment note. The note requires four equal payments of $5,922, consisting of accrued interest and principal, payable on December 31 each year from 2019 through 2022. **Objective:** Prepare an amortization table for this installment note. (Round all amounts to the nearest whole dollar.) **Amortization Table:** | Period Ending Date | (A) Beginning Balance | (B) Debit Interest Expense | (C) Debit Notes Payable | (D) Credit Cash | (E) Ending Balance | |--------------------|-----------------------|----------------------------|-------------------------|-----------------|-------------------| | 2019 | | | | | | | 2020 | | | | | | | 2021 | | | | | | | 2022 | | | | | | | Total | | | | | | **Explanation:** - **Period Ending Date:** The year at the end of which the payment is made. - **(A) Beginning Balance:** The balance of the installment note at the beginning of the period. - **(B) Debit Interest Expense:** The interest cost accrued during the period. - **(C) Debit Notes Payable:** The portion of the payment that reduces the principal balance. - **(D) Credit Cash:** The total payment made, which is consistent at $5,922 each year. - **(E) Ending Balance:** The balance of the installment note at the end of the period after the payment is applied. This table helps understand how much of each payment goes toward interest versus reducing the principal balance, providing insight into the reduction of debt over time.
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