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Determine the current portion of the note payable

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Question - Natalie and Curtis have been experiencing great demand for their cookies and muffins. As a result, they are now thinking about buying a commercial oven. They know which oven they want and that it will cost $17,000. The company already has $5,000 set aside for the purchase and will need to borrow the rest.

Natalie and Curtis met with a bank manager to discuss their options. She is willing to lend Cookie & Coffee Creations Inc. $12,000 on November 1, 2020, for 3 years at a 5% interest rate. The terms provide for fixed principal payments of $2,000 on May 1 and November 1 of each year plus 6 months of interest.

Required -

1. Prepare a payment schedule for the life of the note.

2. Prepare the journal entry for the purchase of the oven and the issue of the note payable on November 1, 2020.

3. Prepare the journal entries on May 1 and November 1 for the note.

4. Determine the current portion of the note payable and the long-term portion of the note payable at October 31, 2021.

Reference no: EM132640946

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