On January 1 2018 Allgood Company purchased equipment and si

On January 1, 2018, Allgood Company purchased equipment and signed a six-year mortgage note for S93000 at 15% The note will be paid in equal annual installments of $24,574, beginning January 1, 2019. Calculate the portion of interest expense paid on the third installment. (Round your answer to the nearest whole number.) O A. $10,524 O B. $82,376 ??. $24.574 O D. $13,950

Solution

The Answer is “A. $10,524”

Year

Opening Balance

Annual Installments

Interest at 15%

Principal Payments

Closing Balance

1

93,000

24,574

13,950

10,624

82,376

2

82,376

24,574

12,356

12,218

70,158

3

70,158

24,574

10,524

14,050

56,108

4

56,108

24,574

8,416

16,158

39,950

5

39,950

24,574

5,993

18,581

21,369

6

21,369

24,574

3,205

21,369

-

Portion of Interest Expense paid on the Third Installment = $10,524

Year	Opening Balance	Annual Installments	Interest at 15%	Principal Payments	Closing Balance
1	93,000	24,574	13,950	10,624	82,376
2	82,376	24,574	12,356	12,218	70,158
3	70,158	24,574	10,524	14,050	56,108
4	56,108	24,574	8,416	16,158	39,950
5	39,950	24,574	5,993	18,581	21,369
6	21,369	24,574	3,205	21,369	-