| Example 14.3: AS&K, Inc. borrowed $250,000 by issuing an 8%, three-year note on January 1,2014. AS&K must make payments every six months, beginning June 30,2014. The note will be fully paid at maturity on December 31,2016. AS&K prepares annual financial statements. Prepare the amortization table for this note, along with any necessary journal entries. Also prepare the t-account for the notes payable account. |
| | Principal we borrowed on January 1, 2014 | | | | | = | PV of all semiannual installment payments in the future |
| | 250000 | | | | | | 250000 |
| | | | | Annual Interest Rate | | | Semiannual Interest rate |
| | | | | 8% |
| | | | | Years | | | Semiannual periods |
| | | | | 3 |
| | | | | | | | Semiannual installment payment |
| | | | | | = Prior Carrying Value x Semiannual Interest Rate |
| | | Period | Date | Total Payment (A) | Interest Payment (B) | | Principal Payment (A-B) | | Carrying Value (Prior CV - Principal paid) |
| | | 0 |
| | | 1 | 6/30/14 |
| | | 2 | 12/31/14 |
| | | 3 | 6/30/15 |
| | | 4 | 12/31/15 |
| | | 5 | 6/30/16 |
| | | 6 | 12/31/16 |