### Journal Entry Table for Note Issuance and Interest Payments---**Objective:** Provide the required entries for the borrower for the issuance of the note on January 1, Year 1, and the interest payments on December 31 of Year 1, Year 2, and Year 3.**Note:** Round your answer to the nearest whole dollar.---#### Table OverviewThis table outlines the financial journal entries needed for the issuance of a note and subsequent interest payments over a three-year period. It is structured with columns for the date, account name, debit (Dr.), and credit (Cr.) amounts, all of which are currently unset and left with placeholder zeros.---#### Table Details| Date | Account Name | Dr. | Cr. ||----------------|-------------------------------------|-----|-----|| Jan. 1, Year 1 | | 0 | 0 || | | 0 | 0 || | **To record issuance of note.** | | || Dec. 31, Year 1| | 0 | 0 || | | 0 | 0 || | | 0 | 0 || | **To record interest payment.** | | || Dec. 31, Year 2| | 0 | 0 || | | 0 | 0 || | | 0 | 0 || | **To record interest payment.** | | || Dec. 31, Year 3| | 0 | 0 || | | 0 | 0 || | | 0 | 0 || | **To record interest payment.** | | |---#### Description of Transactions- **Jan. 1, Year 1:** Entries are for recording the issuance of the note. Specific accounts and amounts need to be determined based on the note's value and conditions.- **Dec. 31, Year 1, 2, 3:** Entries are for recording the interest payments occurring at the end of each year. Each entry will include details of the amount of interest expense recognized and cash or other related accounts affected.Each entry **Recording Entries for an Installment Note Payable**On January 1 of Year 1, a borrower signed a long-term note with a face amount of $240,000. The time to maturity is three years, with a stated rate of 8%. The market rate is 10%. The note will be paid in three equal annual installments of $93,127 on each December 31 (which is the accounting year-end for the borrower).**Required****Note:** Round your answer to the nearest whole dollar.a. Compute the cash received by the borrower. $0b. Prepare a debt amortization schedule.**Note:** Round each amount in the table to the nearest whole dollar. **Note:** Use a negative sign for the "Reduction in N.P." amounts.| Date | Cash | Interest Expense | Reduction in N.P. | Carrying Value ||---------------|------|------------------|-------------------|----------------|| Jan. 1, Year 1| $0 | $0 | $0 | $0 || Dec. 31, Year 1| $0 | $0 | $0 | $0 || Dec. 31, Year 2| $0 | $0 | $0 | $0 || Dec. 31, Year 3| $0 | $0 | $0 | $0 || Total | $0 | $0 | $0 | |This table is intended to guide the user in calculating and recording the amortization of the loan over the three-year term, taking into account interest expense, reduction in note payable, and the carrying value after each installment payment.

Written agreements called "notes payable" state that one party will give the other party a specific sum of money. A note payable can also be thought of as a loan between two parties. Liabilities show up on a balance sheet for notes payable. When the sums are due within a year, they are also categorized as current liabilities. When a note's maturity date is more than a year away, it is classified as a long-term liability.Cash received by the borrower is the sum of the present value of all the installments to be paid on December 31.Cash Received = Annual payment x PV of 10% for 3 years= $93,127 x 2.486851991= $231,593Debt Amortization Schedule :DateCashInterest ExpenseReduction in N.P.Carrying ValueJan 1, Year 1$231,593Dec 31, Year 1$93,127$23,159-$69,968$161,625Dec 31, Year 2$93,127$16,163-$76,964$84,661Dec 31, Year 3$93,127$8,466-$84,661-$279,381$47,788-$231,593DateAccount NameDebitCreditJan 1, Year 1Equipment$231,593Note Payable$231,593(To record issuance of note)Dec 31, Year 1Interest Expense$23,159Note Payable$69,968Cash$93,127(To record interest payment)Dec 31, Year 2Interest Expense$16,163Note Payable$76,964Cash$93,127(To record interest payment)Dec 31, Year 3Interest Expense$8,466Note Payable$84,661Cash$93,127(To record interest payment)Answer (a) :Cash received by the borrower = $231,593Answer (b) :Debt Amortization Schedule :DateCashInterest ExpenseReduction in N.P.Carrying ValueJan 1, Year 1$231,593Dec 31, Year 1$93,127$23,159$69,968$161,625Dec 31, Year 2$93,127$16,163$76,964$84,661Dec 31, Year 3$93,127$8,466$84,661-$279,381$47,788$231,593Answer (c) :Journal entries :DateAccount NameDebitCreditJan 1, Year 1Equipment$231,593Note Payable$231,593(To record issuance of note)Dec 31, Year 1Interest Expense$23,159Note Payable$69,968Cash$93,127(To record interest payment)Dec 31, Year 2Interest Expense$16,163Note Payable$76,964Cash$93,127(To record interest payment)Dec 31, Year 3Interest Expense$8,466Note Payable$84,661Cash$93,127(To record interest payment)

Business

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Recording Entries for an Installment Note Payable On January 1 of Year 1, a borrower signed a long-term note, face amount of $240,000; time to maturity is three years; stated rate of 8%. The market rate is 10%. The note will be paid in three equal annual installments of $93,127 on each December 31 (which is the accounting year-end for the borrower). Required Note: Round your answer to the nearest whole dollar. a. Compute the cash received by the borrower. $ 0 b. Prepare a debt amortization schedule. Note: Round each amount in the table to the nearest whole dollar. Note: Use a negative sign for the "Reduction in N.P." amounts. Date Jan. 1, Year 1 Dec. 31, Year 1 $ Dec. 31, Year 2 $ Dec. 31, Year 3 $ Total $ Cash 0 $ 0 $ 0 $ 0 $ Interest Expense Reduction in N.P. 0 $ 0 $ 0 $ 0 $ $ 0 $ 0 $ 0 $ 0 Carrying Value 0 0 0 0

Recording Entries for an Installment Note Payable On January 1 of Year 1, a borrower signed a long-term note, face amount of $240,000; time to maturity is three years; stated rate of 8%. The market rate is 10%. The note will be paid in three equal annual installments of $93,127 on each December 31 (which is the accounting year-end for the borrower). Required Note: Round your answer to the nearest whole dollar. a. Compute the cash received by the borrower. $ 0 b. Prepare a debt amortization schedule. Note: Round each amount in the table to the nearest whole dollar. Note: Use a negative sign for the "Reduction in N.P." amounts. Date Jan. 1, Year 1 Dec. 31, Year 1 $ Dec. 31, Year 2 $ Dec. 31, Year 3 $ Total $ Cash 0 $ 0 $ 0 $ 0 $ Interest Expense Reduction in N.P. 0 $ 0 $ 0 $ 0 $ $ 0 $ 0 $ 0 $ 0 Carrying Value 0 0 0 0

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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