On January 1, a company borrowed cash by issuing a $318,000, 6%, installment note to be paid in four equal payments at the end of each year beginning December 31.

On January 1, a company borrowed cash by issuing a $318,000, 6%, installment note to be paid in four

equal payments at the end of each year beginning December 31.

Use (Table 4)

(a) What would be the amount of each installment? (Round "PV Factor" to 5 decimal places and final

answer to the nearest dollar amount. Omit the "$" sign in your response.)

Installment $ 91,772 ± 0.1%

(b) Prepare the journal entry for the second installment payment. (Round "PV Factor" to 5 decimal

places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Date General Journal Debit Credit

Dec. 31 Interest expense 14,718 ± 0. 1 %

Note payable 77,054 ± 0. 1 %

Cash 91,772 ± 0.1%

Explanation:

(a)

$318,000 ÷ 3.46511 = $91,772

amount of

loan (from Table 4)

n = 4, i = 6% installment

payment

(b)

Interest expense (6% × ($318,000 – [$91,772 – 6% × $318,000])) = 14,718