Exercise 1420 Installment note amortization schedule LO143 A

Exercise 14-20 Installment note; amortization schedule [LO14-3] American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. In payment for the $5.8 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required 1. Prepare the journal entry for American Food Services\' purchase of the machine on January 1, 2018 2. Prepare an amortization schedule for the four-year term of the installment note 3. Prepare the journal entry for the first installment payment on December 31, 2018 4. Prepare the journal entry for the third installment payment on December 31, 2020 Complete this question by entering your answers in the tabs below. Req 2 Req 1 3 and 4 Prepare an amortization schedule for the four-year term of the installment note. (Enter your answers in whole dollars.) Cash PaymentEffective Interest Decrease in Balance Outstanding Balance Dec.31 2018 2019 2020 2021

Solution

Please note your answer may differ if your Annuity factor in decimals is different.

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Equated Yearly Installment	=	Amount/Annuity Factor
Equated Yearly Installment	=	5800000/3.16986
Equated Yearly Installment	=	$                     1,829,733.81