Required: | |
1. |
Complete the below table to calculate the total amount of each installment payment.
|
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).
|
1.
2.
3.
HereNote balance | $ | 430,000 | |
Number of periods | 5 | ||
Interest rate | 5 | % | |
Value from Table B.3 | 4.3295 | ||
Payment ($430,000 / 4.3295) | $ | 99,319 | |
2.
Beginning Balance = Prior Ending Balance |
Debit Interest expense = 5% × Beginning Balance |
Debit Notes Payable = Credit Cash – Debit Interest expense |
Credit Cash = Computed |
Ending Balance = Beginning Balance – Debit Notes Payable |
3.
Dec. 31: Accrued interest on the installment note payable ($21,500 × 2/12) = $3,583 |
Oct. 31: Record first payment on installment note (interest expense = $21,500 – $3,583) = $17,917 |
Question 3. 2/12 is from where?
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