On February 1, 2011, Willmar Corporation borrowed $100,000 from its bank by sign

Question

On February 1, 2011, Willmar Corporation borrowed $100,000 from its bank by signing a 12 percent, 15-year note payable. The note calls for 180 monthly payments of $1,430. Each payment includes an interest and a principal component.

Compute the interest expense in February. (Omit the "$" sign in your response.)

Compute the portion of Willmar's March 31, 2011, $1,430 payment that will be applied to the principal of the note. (Round intermediate calculations and your final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Compute the carrying value of the note on April 30, 2011 (round to the nearest dollar). (Round intermediate calculations and your final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Compute the interest expense in February. (Omit the "$" sign in your response.)

Explanation / Answer

Interest in Feb = 100,000 * 1% = 1,000

Principal Paid = 1430 -1000 = 430

Principal Left = 100,000 - 430 = 99,570

Interest of Mar = 99,570 * 1% = 995.7

Principal Paid = 1430 -995.7 = 434.3

Principal Left = 99,570 - 434.3 = 99,135.7

Interest of Apr 99,135.7 * 1% = 991.35

Principal Paid = 1430 -991.35 = 438.65

Principal Left = 99,135.7 - 438.65 = 98,697.05

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