Frevert purchased a new piece of equipment to be used in its new facility. The $

Question

Frevert purchased a new piece of equipment to be used in its new facility. The $448,000 piece of equipment was purchased with a $42,000 down payment and with cash received through the issuance of a $406,000, 9%, 5-year mortgage note payable issued on October 1, 2014. The terms provide for quarterly installment payments of $25,433 on December 31, March 31, June 30, and September 30 (a) Prepare an installment payments schedule for the first five payments of the notes payable. (Round answers to O decimal places, e.g. 125.) Cash Payment Interest Expense Reduction of Principal Principal Balance Quarterly Interest Period Issue Date 1 2 3 4 5 40600 25433 25433 25433 25433 25433

Explanation / Answer

Column1 Column2 Column3 Column4 Column5 Column6 Column7 Column8 Column9 Column10 Column11 a) Installment payment schdedule interest period cash payment interest Expense Reduction of pricnipal principal balance issue date $406,000 1 25,433 5075 20358 385642 2 25,433 4821 20612 365030 3 25,433 4563 20870 344159 4 25,433 4302 21131 323028 5 25,433 4038 21395 301633 Column1 Column2 Column3 Column4 Column5 Accounts titles Debit Credit 31-Dec Mortage payable 20,358 interest expense 5075 To Cash 25,433 Column1 Column2 Column3 Baalnce sheet Current liabilties Mortgage payable 84,008 long term liabilties 301,634 total liabilties 385642

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