Exercise 10-10 Installment note with equal total payments LO C1 On January 1, 20
ID: 2402288 • Letter: E
Question
Exercise 10-10 Installment note with equal total payments LO C1 On January 1, 2017, Eagle borrows $15,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $4.428, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. (Table B1. Table 82, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) Prepare an amortization table for this installment note. 3 Answer is complete but not entirely correct. Payments Period Debit Ending Beginning Interest Debit Notes Credit Ending Date Balance Expense Payable Cash Balance 2017 15,000 1,050 44283378 1 ,050$4,428s 11,622 3,378 11,6224428 814 4,4283,6158 8,007 4.140 2018 2019 2020 Total ,007 4400 2.424 1 44283 3.067 4140 1,716 4.140 8 4,849 15,000 15,000Explanation / Answer
Period
Beginning Balance
Interest= Beginning balance*7%
Debit notes payable = 4428- Interest
Credit Cash = Equal payment =4428
Ending Balance = Beginning balance – Debit amount of notes payable
2017
15000
1050
3378
4428
11622
2018
11622
814
3614
4428
8007
2019
8007
561
3867
4428
4140
2020
4140
288*
4140
4428
0
In 2020 Interest amount is adjusted in order to make ending balance 0
(Note: In 2018 closing balance will be 8008 by calculation but given as 8007 due to rounding difference arise during calculation)
Period
Beginning Balance
Interest= Beginning balance*7%
Debit notes payable = 4428- Interest
Credit Cash = Equal payment =4428
Ending Balance = Beginning balance – Debit amount of notes payable
2017
15000
1050
3378
4428
11622
2018
11622
814
3614
4428
8007
2019
8007
561
3867
4428
4140
2020
4140
288*
4140
4428
0
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