Little Company borrowed $41,000 from Sockets on January 1, 2021, and signed a three-year, 7% installment note to be paid in three equal payments at the end of each year. The present value of an ordinary annuity of $1 for 3 periods at 7% is 2.62432. Required:
1. Prepare the journal entry on January 1, 2021, for Sockets’ lending the funds.
2. Calculate the amount of one installment payment.
3. Prepare an amortization schedule for the three-year term of the installment note.
4. Prepare the journal entry for Sockets’ first installment payment received on December 31, 2021.
5. Prepare the journal entry for Sockets’ third installment payment received on December 31, 2023.