Recording Entries for an Installment Note Payable On January 1, 2020, a borrower signed a long-term...

 

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Recording Entries for an Installment Note Payable On January 1, 2020, a borrower signed a long-term note, face amount, $240,000; time to maturity, three years; stated rate of interest, 8%. The market rate of interest of 10% determined the cash received by the borrower. The note will be paid in three equal annual installments of $93,127 each December 31 (which is also the end of the accounting period for the borrower). Required a. Compute the cash received by the borrower and prepare a debt amortization schedule. • Note: Round your answer to the nearest whole dollar. 1. Compute the cash received by the borrower. $ 231,588 X 2. Prepare a debt amortization schedule. Note: Round each amount in the table to the nearest whole dollar. Note: Use a negative sign for the "Reduction in N.P." amounts. ● Date Jan. 1, 2020 Dec. 31, 2020 $ Dec. 31, 2021 Dec. 31, 2022 Total $ Date Jan. 1, 2020 Cash 93,127 $ 93,127 ✔ 93,127✔ 279,381 x $ Interest Expense Reduction in N.P. Carrying Value 231,590 * 161,622 x 84,658 x 0 ✓ Cash b. Provide the required entries for the borrower for the issuance of the note on January 1, 2020, and the interest payments in 2020, 2021, and 2022. • Note: List multiple debits or credits (when applicable) in alphabetical order. • Note: Round your answer to the nearest whole dollar. Note Payable Dec. 31, 2020 Interest Expense Note Payable Cash 23,159 $ 16,163 8,466 ✔ 47,788 ✔ $ Dec. 31, 2021 Interest Expense Note Payable Cash Dec. 31, 2022 Interest Expense Note Payable 69,958 x 76,964 x 84,661 x 231,593 x Account Name $ ◆ ◆ ✓ + ✓ + ✓ + ✓ ✔ ✓ ✔ + ✓ ✔ ✔ Dr. 231,590 * 8,410 x 23,159✔ 69,968 ✔ 0✔ 16,163 ✔ 76,964 ✓ 0✔ 8,466 ✔ 84,661 ✓ Cr. 0✔ 8,410 x 0✔ 0✔ 93,127 ✔ 0 ✓ 0✔ 93,127 v 0 ✓ 0 ✓ Recording Entries for an Installment Note Payable On January 1, 2020, a borrower signed a long-term note, face amount, $240,000; time to maturity, three years; stated rate of interest, 8%. The market rate of interest of 10% determined the cash received by the borrower. The note will be paid in three equal annual installments of $93,127 each December 31 (which is also the end of the accounting period for the borrower). Required a. Compute the cash received by the borrower and prepare a debt amortization schedule. • Note: Round your answer to the nearest whole dollar. 1. Compute the cash received by the borrower. $ 231,588 X 2. Prepare a debt amortization schedule. Note: Round each amount in the table to the nearest whole dollar. Note: Use a negative sign for the "Reduction in N.P." amounts. ● Date Jan. 1, 2020 Dec. 31, 2020 $ Dec. 31, 2021 Dec. 31, 2022 Total $ Date Jan. 1, 2020 Cash 93,127 $ 93,127 ✔ 93,127✔ 279,381 x $ Interest Expense Reduction in N.P. Carrying Value 231,590 * 161,622 x 84,658 x 0 ✓ Cash b. Provide the required entries for the borrower for the issuance of the note on January 1, 2020, and the interest payments in 2020, 2021, and 2022. • Note: List multiple debits or credits (when applicable) in alphabetical order. • Note: Round your answer to the nearest whole dollar. Note Payable Dec. 31, 2020 Interest Expense Note Payable Cash 23,159 $ 16,163 8,466 ✔ 47,788 ✔ $ Dec. 31, 2021 Interest Expense Note Payable Cash Dec. 31, 2022 Interest Expense Note Payable 69,958 x 76,964 x 84,661 x 231,593 x Account Name $ ◆ ◆ ✓ + ✓ + ✓ + ✓ ✔ ✓ ✔ + ✓ ✔ ✔ Dr. 231,590 * 8,410 x 23,159✔ 69,968 ✔ 0✔ 16,163 ✔ 76,964 ✓ 0✔ 8,466 ✔ 84,661 ✓ Cr. 0✔ 8,410 x 0✔ 0✔ 93,127 ✔ 0 ✓ 0✔ 93,127 v 0 ✓ 0 ✓

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Proceeds form Notes Pyable Present Value of Cash Outflows discounting at market rate Workings Da... View the full answer