On November 1, 2015, Norwood borrows $430,000 cash from a bank by signing a five-year installment note bearing 5% 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.

On November 1, 2015, Norwood borrows $430,000 cash from a bank by signing a five-year installment note bearing 5% 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.

Complete an amortization table for this installment note.

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).

Explanation:

1.

Note 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

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