Entries for Installment Note TransactionsOn January 1 of Year 1, Bryson Company obtained a $26,000, four-year, 12% installment note from Campbell Bank. The note requires annual payments of $8,560, beginning on December 31 of Year 1.a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers.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.c. How will the annual note payment be reported in the Year 1 income statement? Entries for Installment Note TransactionsOn January 1 of Year 1, Bryson Company obtained a $26,000, four-year, 12% installment note from Campbell Bank. The note requires annual payments of $8,560, beginning on December 31 of Year 1.a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers.Amortization of Installment NotesInterest ExpenseJanuary 1Carrying AmountNote Payment(12% of January 1Decrease inDecember 31For the Year Ending(Cash Paid)Note Carrying Amount)Notes PayableCarrying AmountYear 1Year 2Year 3Year 4b. Journalize the entries for the issuance of the note and the four annual note payments. If an amount box does not require an entry, leaveblank.Year 1 Jan. 12 exhibit_10-4.jpg (826x297)++ → C Acollege.cengage.com/geyser/warren_9781337398169/images/ch10/exhibit. *ABPYear 1 Dec. 31| AppsExhibit 4 Allocation of Periodic PaymentsYear 2 Dec. 31ABDEDecreaseDecember 31in NotesCarryingInterest Expense(6% of January 1Note Carrying Amount)$ 1,440 (6% of $24,000)January 1CarryingNotePayment(cash paid)$ 5,698For the Year EndingPayable(B - C)$ 4,258AmountYear 3 Dec. 31December 31Amount(A - D)Year 1$24,000$19,742Year 219,7425,6981,185 (6% of $19,742)4,51315,229Year 315,2295,698914 (6% of $15,229)4,78410,445Year 410,4455,698627 (6% of $10,445)5,0715,374Year 4 Dec. 31324* (6% of $5,374)$4,490Year 55,3745,698$28,4905,374$24,000*Rounded ($5,698 - $5,374).1I III III III III000 111 111 1II c. How will the annual note payment be reported in the Year 1 income statement?of $would be reported on the income statement.

Interest expense is the amount paid om bonds/notes payable.

Answered: On January 1 of Year 1, Bryson Company…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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Entries for Installment Note Transactions

On January 1 of Year 1, Bryson Company obtained a $26,000, four-year, 12% installment note from Campbell Bank. The note requires annual payments of $8,560, beginning on December 31 of Year 1.

a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers.

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.

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

Entries for Installment Note Transactions
On January 1 of Year 1, Bryson Company obtained a $26,000, four-year, 12% installment note from Campbell Bank. The note requires annual payments of $8,560, beginning on December 31 of Year 1.
a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4. Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers.
Amortization of Installment Notes
Interest Expense
January 1
Carrying Amount
Note Payment
(12% of January 1
Decrease in
December 31
For the Year Ending
(Cash Paid)
Note Carrying Amount)
Notes Payable
Carrying Amount
Year 1
Year 2
Year 3
Year 4
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
blank.
Year 1 Jan. 1
2 exhibit_10-4.jpg (826x297)
+
+ → C A
college.cengage.com/geyser/warren_9781337398169/images/ch10/exhibit. *
ABP
Year 1 Dec. 31
| Apps
Exhibit 4 Allocation of Periodic Payments
Year 2 Dec. 31
A
B
D
E
Decrease
December 31
in Notes
Carrying
Interest Expense
(6% of January 1
Note Carrying Amount)
$ 1,440 (6% of $24,000)
January 1
Carrying
Note
Payment
(cash paid)
$ 5,698
For the Year Ending
Payable
(B - C)
$ 4,258
Amount
Year 3 Dec. 31
December 31
Amount
(A - D)
Year 1
$24,000
$19,742
Year 2
19,742
5,698
1,185 (6% of $19,742)
4,513
15,229
Year 3
15,229
5,698
914 (6% of $15,229)
4,784
10,445
Year 4
10,445
5,698
627 (6% of $10,445)
5,071
5,374
Year 4 Dec. 31
324* (6% of $5,374)
$4,490
Year 5
5,374
5,698
$28,490
5,374
$24,000
*Rounded ($5,698 - $5,374).
1I III III III III
000 111 111 1II

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

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