*Problem 14-3 Oriole Inc. developed a new sales gimmick to help sell its invento
ID: 2592119 • Letter: #
Question
*Problem 14-3 Oriole Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Oriole offered a low downpayment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers. On January 1, 2017, a customer purchased a new $31,400 automobile, making a downpayment of $1,240. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Oriole required a $377 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2018. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2020 Prepare a note amortization schedule for the first year. (Round answers to 0 decimal places, e.g. 38,548.) Cash Paid Interest Expense Discount Amortized Carrying Amount of Note Date Indicate the amount the customer owes on the contract at the end of the first year. Round answer to 0 decimal places, e.g. 38,548.) The customer owes on the contract at the end of the first year Compute the amount of the new quarterly payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) The new quarterly payments Prepare a note amortization schedule for these new payments for the next 2 years (Round answers to 0 decimal places, e.g. 38,548.) Cash Paid Interest Expense Discount Amortized Carrying Amount of Note Date 10/1/18 10/1/19 1/1/20Explanation / Answer
cash paid
interest expense =2% on carrying value of note
discount amortized = interest expense-cash paid
carrying valueof note
1/1/2017
30160
4/1/2017
377
603.2
226.2
30386.2
7/1/2017
377
607.724
230.724
30616.92
10/1/2017
377
612.3385
235.3385
30852.26
1/1/2018
377
617.0452
240.0452
31092.31
amount of that customer owes on the contract on jan 1 2018
31092.31
new quartely payment
present value*rate / 1-(1+r)^-n
31092.31*2% / 1-(1.02)^-8
621.8461/.14650
4244.405
date
cash paid
interest expense
discount amortized
carrying valueof note
1/1/2018
31092.31
4/1/2018
4244.405
621.8462
3622.559
27469.75
7/1/2018
4244.405
549.395
3695.01
23774.74
10/1/2018
4244.405
475.4948
3768.91
20005.83
1/1/2019
4244.405
400.1166
3844.288
16161.54
4/1/2019
4244.405
323.2308
3921.174
12240.37
7/1/2019
4244.405
244.8074
3999.597
8240.77
10/1/2019
4244.405
164.8154
4079.589
4161.181
10/1/2020
4244.405
83.22362
4161.181
0
cash paid
interest expense =2% on carrying value of note
discount amortized = interest expense-cash paid
carrying valueof note
1/1/2017
30160
4/1/2017
377
603.2
226.2
30386.2
7/1/2017
377
607.724
230.724
30616.92
10/1/2017
377
612.3385
235.3385
30852.26
1/1/2018
377
617.0452
240.0452
31092.31
amount of that customer owes on the contract on jan 1 2018
31092.31
new quartely payment
present value*rate / 1-(1+r)^-n
31092.31*2% / 1-(1.02)^-8
621.8461/.14650
4244.405
date
cash paid
interest expense
discount amortized
carrying valueof note
1/1/2018
31092.31
4/1/2018
4244.405
621.8462
3622.559
27469.75
7/1/2018
4244.405
549.395
3695.01
23774.74
10/1/2018
4244.405
475.4948
3768.91
20005.83
1/1/2019
4244.405
400.1166
3844.288
16161.54
4/1/2019
4244.405
323.2308
3921.174
12240.37
7/1/2019
4244.405
244.8074
3999.597
8240.77
10/1/2019
4244.405
164.8154
4079.589
4161.181
10/1/2020
4244.405
83.22362
4161.181
0
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.