On January 1, 2021, 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 December 31.

Required 

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

2. Prepare journal entries to record the note’s issuance and each of the first two payments.

Exhibit 14.12

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EXHIBIT 14.12 Payments Installment Note Amortization Schedule (A) (B) (C) (D) (E) Debit Debit Credit Interest Notes Ending Expense 8% x (A) Payable (D) – (B) Beginning + Cash Balance Period Ending Date Balance (computed) (А) — (С) Excel: Installment note payments. (1) 12/31/2021 $60,000 $4,800 $ 18,482 $23,282 $41,518 B 1 Rate per period (2) 12/31/2022 41,518 3,321 19,961 23,282 21,557 8% 2 Number of periods (3) 12/31/2023 21,557 1,725 21,557 23,282 Loan amount $60,000 $9,846 $60,000 $69,846 4 Loan payments =-PMT(B1,82,B3)-$23,282 Decreasing Accrued Interest Increasing Principal Component Equal Cash Payments Excel: Principal portion of payments. A B 1 Rate per period 8% 2021 $4,800 $18,482 L Interest 2 Number of periods 3 * 2022 $3,321 $19,961 Loan amount $60,000 Principal Period Principal 2023 $1,725 $21,557 1 $5,000 $15,000 $25,000 2 3 *Table B.3 in Appendix B is used to compute the dollar amount of three payments that equal the initial note balance of $60,000 at 8% =-PPMT(B1,A5,82,B3)-$18,482 interest. We go to Table B.3, row 3, and across to the 8% column, where the present value factor is 2.5771. The dollar amount is then =-PPMT(B1.A6,82,B3)-$19,961 computed by solving the following equation. The amount is computed by dividing $60,000 by 2.5771, yielding $23,282. Table Present Value Factor Dollar Amount Present Value =-PPMT(B1,A7,B2,B3)-$21,557 В.3 2.5771 $60.000 End of Year