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Chapter 9 - Part 1 Winter 2020 The following information is provided for LAX, LLC...

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Chapter 9 - Part 1 Winter 2020 The following information is provided for LAX, LLC on January 1, 2020: State Bank installment loan Principal: $ 2,500,000 Rate: 5.30% Term: 5 years Payment: $ 582,234 Payment dates: annual, end of year Par: Stated rate: Market rate: Term & coupons: Selling price: Discount: Bond issuance 1,000,000 5.00% 5.20% 3 years 994,510 5,490 semi-annual Interest (beg. bal. x rate) Note reduction Ending note balance $ 2,500,000 1. Prepare the installment loan amortization table: Beginning note Date balance Annual payment 01/01/20 12/31/20 2,500,000 582,234 12/31/21 582,234 12/31/22 582,234 12/31/23 582,234 12/31/24 582,234 2. Record the note and the first annual installment payment: Accounts Debits Credits Date 01/01/20 12/31/20 Discount amortization - Total discount balance $ 5,490 Ending note balance 994,510 $ 3. Prepare the bond amortization table using the straight-line method: Beginning Coupon Interest exp. Date carrying value _payments (coup.+amort.) 01/01/20 06/30/20 994,510 12/31/20 25,000 06/30/21 25,000 12/31/21 25,000 06/30/22 25,000 12/31/22 25,000 25,000 4. Record the sale of the bonds and the first semi-annual coupon payment: Accounts Debits Date 01/01/20 ts - Credits Credits 06/30/20

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