Exercise 14-20 Installment note; amortization schedule [LO14-3] American Food Services, Inc., acquired a packaging machine from Barton and...

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Solution 1:

Journal Entries - American Food Services
Date	Particulars	Debit	Credit
1-Jan-18	Equipment Dr	$4,300,000.00
	To Notes payable		$4,300,000.00
	(To record purchase of machine by issue of note)

Solution 2:

Annual Installment amount = $4,300,000 / Cumulative PV factor at 9% for 4 periods

= $4,300,000 / 3.23972 = $1,327,275

Solution 3:

Journal Entries - American Food Services
Date	Particulars	Debit	Credit
31-Dec-18	Interest expense Dr	$387,000.00
	Notes Payable Dr	$940,275.00
	To Cash		$1,327,275.00
	(To record installment payment)

Solution 4:

Journal Entries - American Food Services
Date	Particulars	Debit	Credit
31-Dec-20	Interest expense Dr	$210,134.00
	Notes Payable Dr	$1,117,141.00
	To Cash		$1,327,275.00
	(To record installment payment)

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