IV. Installment Loan --Billy borrows $6,000 from Frank. The terms of the loan sp
ID: 2501009 • Letter: I
Question
IV. Installment Loan--Billy borrows $6,000 from Frank. The terms of the loan specify that Billy make 4 annual payments at 10% interest on the unpaid balance. Complete the following table.
Period
Payment
Interest Expense
Principal Reduction
Loan Balance
0
1
2
3
4
V. Cash Flow Problem
Company C issued 100,000 shares of $1 par common stock at par.
They purchased $30,000 of Equipment for cash, useful life is 6 years.
The company earned revenue of $150,000; $110,000 was received in cash, the rest on account.
The company incurred $100,000 of expenses; $80,000 of the expenses were paid in cash; the rest on account.
The company recorded depreciation of $5,000
The company sold $10,000 of Equipment for $13,000 cash.
The company paid a $10,000 dividend in cash.
For the transactions listed above, prepare a cash flow statement using the indirect method.
Period
Payment
Interest Expense
Principal Reduction
Loan Balance
0
1
2
3
4
Explanation / Answer
IV
V Cash flow
Working Note : Net Income
Period Unpaid Balance Interest Expense Principal Reduction Loan Balance 0 0 0 0 6000 1 6000 600 1500 4500 2 4500 450 1500 3000 3 3000 300 1500 1500 4 1500 150 1500 0 1500 6000Related Questions
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