Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 14, Problem 14.11BE
Installment note
• LO14–3
On January 1, a company borrowed cash by issuing a $300,000, 5%, installment note to be paid in three equal payments at the end of each year beginning December 31. What would be the amount of each installment? Prepare the
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Problem 14-5A (Algo) Installment notes LO C1
On January 1, 2021, Norwood borrows $540,000 cash from a bank by signing a five-year installment note bearing 7% interest. The
note requires equal payments of $131,701 each year on December 31.
Required:
1. Complete an amortization table for this installment note.
2. Prepare the journal entries in which Norwood records the following:
(a) Norwood borrows $540,000 cash by signing a five-year, 7% installment note.
(b) Record the first installment payment on December 31, 2021.
(c) Record the second installment payment on December 31, 2022.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Complete an amortization table for this installment note.
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
12/31/2021
12/31/2022
12/31/2023
12/31/2024
12/31/2025
Total
Question 9
On 1 Dec. 2020, Segma Trading Co. borrowed $300,000 for 90 days at 5% by signing a note payable on the same amount
Required:
Select the right journal entry to record the payment of the note at its maturity date.
O Dr. Note Payable
$300,000
Dr. Interest Payable $2,500
Dr. Interest Expence $1,250
O Dr. Cash
Cr. Cash
$303,750
Cr. Note Payable
$300,000
Cr. Interest Expence $2,500
Cr. Interest Payable $1,250
O Dr. Note Payable $300,000
Dr. Interest Expence $2,500
Dr. Interest Payable $1,250
Cr. Cash
$303,750
O Dr. Note Payable $300,000
Dr. Interest Expence $3,750
Cr. Cash
$303,750
$303,750
Problem 6 Luna Company discounted its own 2-year P500,000 12% interest bearing note at the bank onSeptember 1, 2020. The note was dated August 1, 2020. The discount rate was 15%. Preparethe journal entries relating to the said note starting September 1, 2020 until its payment.
Chapter 14 Solutions
Intermediate Accounting, 10 Ed
Ch. 14 - How is periodic interest determined for...Ch. 14 - As a general rule, how should long-term...Ch. 14 - How are bonds and notes the same? How do they...Ch. 14 - What information is contained in a bond indenture?...Ch. 14 - How is the price determined for a bond (or bond...Ch. 14 - A zero-coupon bond pays no interest. Explain.Ch. 14 - Prob. 14.8QCh. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10QCh. 14 - When a notes stated rate of interest is...
Ch. 14 - How does an installment note differ from a note...Ch. 14 - Prob. 14.13QCh. 14 - Prob. 14.14QCh. 14 - Air Supply issued 6 million of 9%, 10-year...Ch. 14 - Both convertible bonds and bonds issued with...Ch. 14 - Prob. 14.17QCh. 14 - Cordova Tools has bonds outstanding during a year...Ch. 14 - If a company prepares its financial statements...Ch. 14 - (Based on Appendix 14A) Why will bonds always sell...Ch. 14 - Prob. 14.21QCh. 14 - Prob. 14.22QCh. 14 - Prob. 14.23QCh. 14 - Bank loan; accrued interest LO132 On October 1,...Ch. 14 - Non-interest-bearing note; accrued interest LO132...Ch. 14 - Determining the price of bonds LO142 A company...Ch. 14 - Determining the price of bonds LO142 A company...Ch. 14 - Effective interest on bonds LO142 On January 1, a...Ch. 14 - Effective interest on bonds LO142 On January 1, a...Ch. 14 - Straight-line interest on bonds LO142 On January...Ch. 14 - Investment in bonds LO142 On January 1, a company...Ch. 14 - Note with unrealistic interest rate LO143 On...Ch. 14 - Installment note LO143 On January 1, a company...Ch. 14 - Prob. 14.12BECh. 14 - Bonds with detachable warrants LO145 Hoffman...Ch. 14 - Convertible bonds LO145 Hoffman Corporation...Ch. 14 - Prob. 14.22ECh. 14 - Prob. 14.36ECh. 14 - Prob. 14.14PCh. 14 - Prob. 14.17PCh. 14 - Prob. 14.21PCh. 14 - Prob. 14.3DMP
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- Installment notes require equal periodic payments. A. What is included in each periodic payment? B. Does the periodic interest expense on an installment note increase or decrease over the life of the note?arrow_forwardPART 1 Cucina Corp. signed a new installment note on January 1, 2018, and deposited the proceeds of $70,000 in its bank account. The note has a 3-year term, compounds 5 percent interest annually, and requires an annual installment payment on December 31. Cucina Corp. has a December 31 year-end and adjusts its accounts only at year-end. Required: Use an online application, such as the loan calculator with annual payments at mycalculators.com, to generate an amortization schedule. Enter that information into an amortization schedule with the following headings: Year, Beginning Notes Payable, Interest Expense, Repaid Principal on Notes Payable, and Ending Notes Payable. Prepare the journal entries on (a) January 1, 2018, and December 31 of (b) 2018, (c) 2019, and (d) 2020. If Cucina Corp.'s year-end were March 31, rather than December 31, prepare the adjusting journal entry would it make for this note on March 31, 2018? PART 1 REQUIRED 1 IN ATTACHED IMAGE Required 2 Prepare…arrow_forwardPart 1 Cucina Corp. signed a new installment note on January 1, 2018, and deposited the proceeds of $70,000 in its bank account. The note has a 3-year term, compounds 5 percent interest annually, and requires an annual installment payment on December 31. Cucina Corp. has a December 31 year-end and adjusts its accounts only at year-end. Required: Use an online application, such as the loan calculator with annual payments at mycalculators.com, to generate an amortization schedule. Enter that information into an amortization schedule with the following headings: Year, Beginning Notes Payable, Interest Expense, Repaid Principal on Notes Payable, and Ending Notes Payable. Prepare the journal entries on (a) January 1, 2018, and December 31 of (b) 2018, (c) 2019, and (d) 2020. If Cucina Corp.'s year-end were March 31, rather than December 31, prepare the adjusting journal entry would it make for this note on March 31, 2018? PART 1 REQUIRED 1 IS IN AN ATTACHED IMAGE Required 2…arrow_forward
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