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Question: On December 31, 2017, Wildhorse Company signed a $1,105,800 note to Sheffield Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Wildhorse's financial situation worsened. On December 31, 2019, Sheffield Bank determined that it was probable that the company would pay back only $663,480 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,105,800 loan.

Prepare a note amortization schedule for Sheffield Bank up to December 31, 2019. (Round answers to 0 decimal places, e.g. 5,275.)

Note Amortization Schedule
(Before Impairment)

Date


Cash
Received


Interest
Revenue


Increase in Carrying
Amount


Carrying
Amount of
Note

12/31/17






$

12/31/18




12/31/19




Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92588196

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