On October 1, 2017, Gordon borrows $150,000 cash from a bank by signing a three-year installment note bearing 10% interest. The note requires equal payments of $60,316 each year on September 30.

Required

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

2. Prepare the journal entries to record (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

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