On November 1, 2017, Norwood borrows $200,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $50,091 each year on October 31.

Required

1. Complete an amortization table for this installment note similar to the one in Exhibit 14.12.

2. Prepare the journal entries in which Norwood records (a) accrued interest as of December 31, 2017 (the end of its annual reporting period) and (b) the first annual payment on the note.

Exhibit 14.12

Transcribed Image Text:

Payments (A) (B) Debit (C) (D) Credit (E) Debit Ending Period Interest Notes Ending Expense 8% x (A) Payable (D) – (B) Cash Balance Beginning Date Balance (computed) (A) – (C) $ 18,482 $60,000 $4,800 $23,282 $41,518 (1) 12/31/2017 (2) 12/31/2018 41,518 3,321 19,961 23,282 21,557 21,557 1,725 21,557 23,282 (3) 12/31/2019 $60,000 $9,846 $69,846 Decreasing Increasing Principal Component Equal | Principal Accrued Total | Interest Interest Payments $4,800 $18,482 2017 2018 $3,321 $19,961 2019 $1,725 $21,557 $20,000 $5,000 $10,000 Cash Payment Pattern $15,000 $25,000 End of Year