a
Concept Introduction:
Installment note is an obligation that requires a series of payments to the lender, these notes are commonly issued for franchises and other businesses when lenders and borrowers agree to spread payments over time.
The computation of each of the four payments on account of notes
b
Concept Introduction:
Installment note is an obligation that requires a series of payments to the lender, these notes are commonly issued for franchises and other businesses when lenders and borrowers agree to spread payments over time.
The amortization table for the note payable.
c
Concept Introduction:
Installment note is an obligation that requires a series of payments to the lender, these notes are commonly issued for franchises and other businesses when lenders and borrowers agree to spread payments over time.
The
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FIN & MGR ACCOUNTING W/ACCESS
- On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)arrow_forwardNext Level Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2 withdrawals: 40,000 at the end of 4 years and 50,000 at the end of 10 years. Analyze the problem to determine the required deposit, stating the procedure to follow and the tables to use in developing the solution.arrow_forwardIf Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?arrow_forward
- Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?arrow_forwardAccess an online loan calculator with annual payments, such as the one at mycalculators.com, to produce an amortization schedule for Welton Corporation's installment note that has original principal of $36,000, interest of 5% compounded annually, and a term of 3 years. Welton Corporation established the note on the first day of its fiscal year and will fully repay the note by the end of year 3 on its December 31 fiscal year-end. Prepare Welton Corporation's journal entries on (a) January 1, Year 1; (b) December 31, Year 1; (C) December 31, Year 2; and (d) December 31, Year 3. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest dollar amount.) View transaction list Journal entry worksheet 2 3 4 > Record the issuance of the note on January 1, Year 1. Note: Enter debits before credits. Transaction General Journal Debit Credit (a) Record entry Clear…arrow_forwardOn January 1, 2021, Strato Corporation borrowed $2 million from a local bank to construct a new building over the next three years. The loan will be paid back in three equal installments of $776,067 on December 31 of each year. The payments include interest at a rate of 8%.Required:1. Record the cash received when the note is issued.2. Prepare an amortization schedule over the three-year life of the installment note. Round answers to the nearest dollar.3. Use amounts from the amortization schedule to record each installment payment.arrow_forward
- On January 1, 2021, Monster Corporation borrowed $9 million from a local bank to construct a new highway over the next four years. The loan will be paid back in four equal installments of $2,657,053 on December 31 of each year. The payments include interest at a rate of 7%. Required: 1. Record the cash received when the note is issued. 2. Prepare an amortization schedule over the four-year life of the installment note. Round answers to the nearest dollar. 3. Use amounts from the amortization schedule to record each installment payment.arrow_forwardComplete an amortization schedule for a $48,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $ $ $ $ $ 2 3 What percentage of the payment represents interest and what percentage represents principal for each of the three years? Do not round intermediate calculations. Round your answers to two decimal places. % Interest % Principal Year 1: % % Year 2: % % Year 3: % % Why do these percentages change over time? These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines. These…arrow_forwardComplete an amortization schedule for a $16,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $ $ $ $ $ 2 3 What percentage of the payment represents interest and what percentage represents principal for each of the three years? Do not round intermediate calculations. Round your answers to two decimal places. % Interest % Principal Year 1: % % Year 2: % % Year 3: % % Why do these percentages change over time? These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines. These…arrow_forward
- FinanceCo lent $8.7 million to Corbin Construction on January 1, 2024, to construct a playground. Corbin signed a three-year, 8% installment note to be paid in three equal payments at the end of each year. Required: Prepare the journal entry for FinanceCo’s lending the funds on January 1, 2024. Prepare an amortization schedule for the three-year term of the installment note. Prepare the journal entry for the first installment payment on December 31, 2024. Prepare the journal entry for the third installment payment on December 31, 2026. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)arrow_forwardCarla Vista Co. issues a 10%, 7-year mortgage note on January 1, 2022, to obtain financing for new equipment. Land is used as collateral for the note. The terms provide for semiannual installment payments of $50,000. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What are the cash proceeds received from the issuance of the note? (Round answer to 2 decimal places, e.g. 25.25.) Carla Vista Co. should receive $ Carla Vista Co. issues a 10%, 7-year mortgage note on January 1, 2022, to obtain financing for new equipment. Land is used as collateral for the note. The terms provide for semiannual installment payments of $50,000. Click here to view the factor table. 3 (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What are the cash proceeds received from the issuance of the note? (Round answer to 2 decimal places, e.g. 25.25.) Carla Vista Co. should receive $arrow_forwardAll In Digital Bank granted a loan to a client on January 1, 2022. The interest on the loan is 10% payable annually starting December 31, 2022. The loan matures in three years on December 31, 2024. Pertinent information on the loan is provided below: Principal amount, P 1,000,000 Origination fee received from the borrower, P 55,200 Direct origination cost paid, P 30,770 Indirect origination cost paid, P 5,000 After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is 11%. What is the carrying value of the loan receivable on December 31, 2023 in Megabank's accounting books?arrow_forward
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