Question - Entries for Issuing Installment Note Transactions
On January 1, 2012, Zinn Company obtained a $39,000, four-year, 10% installment note from Fidelity Bank. The note requires annual payments of $12,303, beginning on December 31, 2012.
a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 3. Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers.
b. Journalize the entries for the issuance of the note and the four annual note payments. For a compound transaction, if an amount box does not require an entry, leave it blank.
c. Describe how the annual note payment would be reported in the 2012 income statement.