Purchased equipment costing $15,608 by taking out a 4-month installment note with First Bank. The note will be paid back in four equal installments of $4,000 at the end of each month for four months. The interest rate on the note is 12% compounded monthly, and the first installment payment is due on December 31, 20X5. Interest calculations are rounded to the nearest whole month and whole dollar. The amortization schedule for this note is as follows: Date 12/1/X5 12/31/X5 1/30/X6 2/27/X6 3/31/X6 Totals Cash Paid Interest Expense 4,000 4,000 4,000 4,000 16,000 156 118 79 39 392 Reduction in CV 3,844 3,882 3,921 3,961 15,608 Carrying Value (CV) 15,608 11,764 7,882 3,961 0
Purchased equipment costing $15,608 by taking out a 4-month installment note with First Bank. The note will be paid back in four equal installments of $4,000 at the end of each month for four months. The interest rate on the note is 12% compounded monthly, and the first installment payment is due on December 31, 20X5. Interest calculations are rounded to the nearest whole month and whole dollar. The amortization schedule for this note is as follows: Date 12/1/X5 12/31/X5 1/30/X6 2/27/X6 3/31/X6 Totals Cash Paid Interest Expense 4,000 4,000 4,000 4,000 16,000 156 118 79 39 392 Reduction in CV 3,844 3,882 3,921 3,961 15,608 Carrying Value (CV) 15,608 11,764 7,882 3,961 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
How would you put this in a general journal entry ?
Transcribed Image Text:Purchased equipment costing $15,608 by taking out a 4-month installment note with First
Bank. The note will be paid back in four equal installments of $4,000 at the end of each
month for four months. The interest rate on the note is 12% compounded monthly, and the
first installment payment is due on December 31, 20X5. Interest calculations are rounded
to the nearest whole month and whole dollar.
The amortization schedule for this note is as follows:
Date
12/1/X5
12/31/X5
1/30/X6
2/27/X6
3/31/X6
Totals
Cash Paid Interest Expense
4,000
4,000
4,000
4,000
16,000
156
118
79
39
392
Reduction in CV
3,844
3,882
3,921
3,961
15,608
Carrying Value
(CV)
15,608
11,764
7,882
3,961
0
13
Expert Solution
Step 1
Golden Rules of Accounting:
|
Account |
Debit |
Credit |
|
Personal Accounts |
The Receiver |
The Giver |
|
Real Accounts |
What comes in |
What goes out |
|
Nominal Accounts |
All Expenses and Losses |
All Incomes and Gains |
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