On January 1, Year 1, Mayberry Company borrowed cash from Central Bank by issuing a $75,000 face value 3-year installment note payable that carried a 9% interest rate. The note is to be repaid by making annual cash payments of $29,629.11, which includes both principal and interest. The payments are to be made on December 31 of each year.Required:a) Prepare an amortization schedule for the term of the loan, showing the amounts to be paid on principal and interest for Year 1, Year 2, and Year 3 and the loan balance at the end of each year. (Round your answers to two decimal points.)b) What amount of interest expense will be shown on the Year 2 income statement?c) What amount of liability for the note will be shown on the balance sheet as of December 31, Year 2?d) Prepare the journal entry

to record the payment made on December 31, Year 2.

What will be an ideal response?

a) 

DateBeginning BalancePaymentInterestPrincipalEnding Balance
Year 1$75,000.00$29,629.11  $6,750.00$22,879.11$52,120.89
Year 252,120.8929,629.11  4,690.8824,938.2327,182.66
Year 327,182.6629,629.10*2,446.4427,182.660
*All computations are rounded to the nearest cent. To fully liquidate the liability, the final payment is one cent less than the others because of rounding differences.

b) $4,690.88

c) $27,182.66

d) 
Interest expense4,690.88?
Notes payable24,938.23?
  Cash?29,629.11
Interest expense each year is equal to the beginning principal balance times 9%. The amount applied to principal each year is equal to the difference between the payment ($29,629.11) and the interest expense. Each payment is recorded as a debit (increase) to interest expense, a debit (decrease) to notes payable for the amount applied to the principal, and a credit (decrease) to cash.

Business

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