Exercise 14-10 Installment note with equal total payments LO C1 On January 1, 20

Question

Exercise 14-10 Installment note with equal total payments LO C1 On January 1, 2017, Eagle borrows $34,000 cash by signing a four-year, 5% installment note. The note requires four equal payments of $9,588, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.) Prepare an amortization table for this installment note Payments Period Ending Date 2017 2018 2019 2020 Total Beginning Debit InterestDebit Notes Credit Ending Balance Expense Payable Cash Balance 34,000$ 1,700 1,700

Explanation / Answer

Solution:

Payments (A) (B) ( C) (D) ( E) Period Ending date Beginning balance Debit Interest Expense Debit Notes Payable Credit Cash Ending Balance 2017 $34,000 $1,700 $7,888 $9,588 $26,112 2018 $26,112 $1,306 $8,282 $9,588 $17,830 2019 $17,830 $891 $8,697 $9,588 $9,133 2020 $9,133 $455 $9,133 $9,588 $0 Total $87,075 $4,352 $34,000 $38,352 $53,075

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