The following amortization schedule indicates the interest and principal that Ch
ID: 2576476 • Letter: T
Question
The following amortization schedule indicates the interest and principal that Chip’s Cookie Corporation (CCC) must repay on an installment note established January 1, 2015. CCC has a December 31 year-end and makes the required annual payments on December 31. Use the amortization schedule to prepare CCC’s required journal entries on (a) January 1, 2015; (b) December 31, 2015; (c) December 31, 2016; (d) December 31, 2017; and (e) December 31, 2018. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
1
Record the notes payable.
2
Record the interest expense of December 31, 2015.
3
Record the interest expense of December 31, 2016.
4
Record the interest expense of December 31, 2017.
5
Record the interest expense of December 31, 2018.
The following amortization schedule indicates the interest and principal that Chip’s Cookie Corporation (CCC) must repay on an installment note established January 1, 2015. CCC has a December 31 year-end and makes the required annual payments on December 31. Use the amortization schedule to prepare CCC’s required journal entries on (a) January 1, 2015; (b) December 31, 2015; (c) December 31, 2016; (d) December 31, 2017; and (e) December 31, 2018. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Explanation / Answer
Solution:
Date
General Journal
Debit
Credit
Jan.1, 2015
Cash or Purchases
$30,000
Notes Payable
$30,000
Dec.31, 2015
Notes Payable
$6,960
Interest Expense
$1,500
Cash
$8,460
Dec.31, 2016
Notes Payable
$7,308
Interest Expense
$1,152
Cash
$8,460
Dec.31, 2017
Notes Payable
$7,673
Interest Expense
$787
Cash
$8,460
Dec.31, 2018
Notes Payable
$8,059
Interest Expense
$401
Cash
$8,460
Note – Interest Expense are given in the schedule of notes payable. Interest Expenses are calculated on outstanding notes payable principal balance by using appropriate interest rate.
The Annual payment for notes payable is $8,460 (which includes interest and principal repayment)
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Date
General Journal
Debit
Credit
Jan.1, 2015
Cash or Purchases
$30,000
Notes Payable
$30,000
Dec.31, 2015
Notes Payable
$6,960
Interest Expense
$1,500
Cash
$8,460
Dec.31, 2016
Notes Payable
$7,308
Interest Expense
$1,152
Cash
$8,460
Dec.31, 2017
Notes Payable
$7,673
Interest Expense
$787
Cash
$8,460
Dec.31, 2018
Notes Payable
$8,059
Interest Expense
$401
Cash
$8,460
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