Problem 10-6A Installment notes LO C1

On November 1, 2015, Norwood borrows $520,000 cash from a bank by signing a five-year installment note bearing 6% interest. The note requires equal total payments each year on October 31. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided)

Required: 1. Complete the below table to calculate the total amount of each installment payment.

Intial Cash Proceeds PV Factor Amount Of Annnual Payment

+ =

2. Complete an amortization table for this installment note. (Round your intermediate calculations to the nearest dollar amount.)

Period Ending Date Beginning Balance Debit Interest Expense +Debit Notes Payable = Credit Cash Ending Balance

10/31/2016

10/31/2017

10/31/2018

10/31/2019

10/31/2020

Total

3. Prepare the journal entries in which Norwood records the following:

(a) Accrued interest as of December 31, 2015 (the end of its annual reporting period).

Record the interest accrued on the note as of December 31, 2015.

Date General Journal Debit Credit

Dec 31,2015

(b)The first annual payment on the note. (Journal Entry) Record the first installment payment on October 31, 2016.

Assume no reversing entries were prepared.

Date: General Journal: Debit :Credit

OCT 31,2016