Question

On January 1 of Year 1, Bryson Company obtained a $197,000, four-year, 5% installment note from Campbell Bank. The note requires annual payments of $55,556, beginning on December 31 of Year 1.

Required:

	a. Prepare a table for this installment note, similar to the one presented in Exhibit 4 .
	b. Journalize the entries for the issuance of the note and the four annual note payments. Refer to the Chart of Accounts for exact wording of account titles.
	c. Describe how the annual note payment would be reported on the Year 1 income statement.

Chart of Accounts

CHART OF ACCOUNTS

Bryson Company

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
126	Interest Receivable
127	Notes Receivable
131	Inventory
141	Office Supplies
142	Store Supplies
151	Prepaid Insurance
191	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Salaries Payable
231	Sales Tax Payable
232	Interest Payable
241	Notes Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
315	Treasury Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue
611	Gain on Redemption of Bonds

	EXPENSES
510	Cost of Goods Sold
515	Credit Card Expense
516	Cash Short and Over
521	Sales Salaries Expense
522	Office Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Selling Expenses
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
538	Store Supplies Expense
541	Bad Debt Expense
561	Depreciation Expense-Store Equipment
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
711	Loss on Redemption of Bonds

Amortization Table

Shaded cells have feedback.

a. Prepare a table for this installment note, similar to the one presented in

Exhibit 4

. Round amounts to the nearest dollar.

Amortization of Installment Notes
	A	B	C	D	E
For the Year Ending Dec. 31	January 1 Carrying Amount	Note Payment	Interest Expense	Decrease in Notes Payable	Dec. 31 Carrying Amount
Year 1
Year 2
Year 3
Year 4

Points:

20 / 23

Feedback

Check My Worka. Review

Exhibit 4

in the text. The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest.

After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full.

Journal

Shaded cells have feedback.

b. Journalize the entries for the issuance of the note and the four annual note payments. Enter transactions for Year 1 on page 10 of the journal, Year 2 on page 12, Year 3 on page 15, and Year 4 on page 17. Refer to the Chart of Accounts for exact wording of account titles.

Question not attempted.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 0/63

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5

Points:

0 / 12

Question not attempted.

PAGE 12

JOURNAL

ACCOUNTING EQUATION

Score: 0/37

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3

Points:

0 / 7

Question not attempted.

PAGE 15

JOURNAL

ACCOUNTING EQUATION

Score: 0/37

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3