FinanceCo lent $8 million to Corbin Construction on January 1, 2021, to construct a playground. Corbin signed a three-year, 6% installment note to be paid in three equal payments at the end of each year.

Required:

1. Prepare the journal entry for FinanceCo's lending the funds on January 1, 2018.

2. Prepare an amortization schedule for the three-year term of the installment note.

3. Prepare the journal entry for the first installment payment on December 31, 2018.

4. Prepare the journal entry for the third installment payment on December 31, 2020.

note to be paid with three equal payments @ 6% interest at the end of each year.

Amortization Schedule

Year Opening Interest 6% 3 equal Paments Repay Closing

1 8000000 480000 2666667 3146667 5333333

2 5333333 320000 2666667 2986667 2666667

3 2666667 160000 2666667 2826667 0

Journal Entries

January 1, 2018

Loan Receivable 8000000

Bank 8000000

Amount given as Loan

December 31, 2018

Cash 3146667

Interest Income 480000

Loan Receivable 2666667

To record the repayment and interest income

December 31, 2020

Cash 2826667

Interest Income 160000

Loan Receivable 2666667

To record the repayment and interest income