On November 1, 2004, Leetch Ltd. borrows $400,000 cash from a bank by signing

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On November 1, 2004, Leetch Ltd. borrows $400,000 cash from a bank by signing a five-year instalment note bearing 8% interest. The note requires equal total payments each year on October 31.

 

Required

1. Compute the total amount of each installment payment.

2. Complete an amortization table for this installment note similar to the one in Exhibit 14.16.

3. Prepare the journal entries in which Leetch records (a) accrued interest as of December 31, 2004

(the end of its annual reporting period), and (b) the first annual payment on the note.

4. Assume that the note does not require equal total payments but five payments of accrued interest

and equal amounts of principal. Complete an amortization table for this note similar to the one in

Exhibit 14.15. Prepare the journal entries to record (a) accrued interest as of December 31, 2004

(the end of its annual reporting period), and (b) the note’s first annual payment.

Check (2) 10/31/2008 ending balance, $92,759

(4) 10/31/2007 ending balance, $160,000

    • 5 years ago
    On November 1, 2004, Leetch Ltd. borrows $400,000 cash from a bank by signing
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