Example Six: On January 1, 2018, a company borrowed $58,000 for 3 years at 4% in
ID: 2529598 • Letter: E
Question
Example Six:
On January 1, 2018, a company borrowed $58,000 for 3 years at 4% interest. The loan requires 3 annual payments of $20,900 on December 31 each year.
Complete the amortization schedule for this loan. (Round amounts up to nearest dollar.)
Date
Cash Paid
Interest Expense
Decrease in Carrying Value (Principal Repayment)
Carrying Value (Principal Balance)
Prepare the journal entry to record the loan at inception on January 1, 2017
Account Name
Debit
Credit
Prepare the journal entry to record payment at December 31, 2019.
Account Name
Debit
Credit
Date
Cash Paid
Interest Expense
Decrease in Carrying Value (Principal Repayment)
Carrying Value (Principal Balance)
Explanation / Answer
Date Cash paid Interest expense Decrease in Carrying Value (Principal Repayment) Carrying Value (Principal Balance) jan 1 2018 58000 dec 31 2018 20900 58000*.04=2320 20900-2320= 18580 58000-18580= 39420 2019 20900 39420*.04= 1577 20900-1577= 19323 39420-19323= 20097 2020 20900 20097*.04= 803 20900-804= 20097 0 Date Account Debit credit jan 1 2018 cash 58000 Loan payable 58000 31 dec 2019 Interest expense 1577 loan payable 19323 cash 20900
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.