Homework SourseExercise 1010 Installment note with equal total payments LO
Exercise 10-10 Installment note with equal total payments LO C1 On January 1, 2017, Eagle borrows $16,000 cash by signing a four-year, 5% installment note. The note requires four equal payments of $4,512, 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.) k Prepare an amortization table for this installiment note Ending Beginning Debit Interest Debit Notes Cash 2017 2018 2019 2020 
Solution
Payments (A) (B) (C) (D) (E) Period Ending Beginning Debit Interest Debit Notes Credit Ending Date Balance Expenses Payable Cash Balance 2017 $ 16,000.00 $ 800.00 $ 3,712.00 $ 4,512.00 $ 12,288.00 2018 $ 12,288.00 $ 614.40 $ 3,897.60 $ 4,512.00 $ 8,390.40 2019 $ 8,390.40 $ 419.52 $ 4,092.48 $ 4,512.00 $ 4,297.92 2020 $ 4,297.92 $ 214.90 $ 4,297.10 $ 4,512.00 $ 0.82 Total $ 2,048.82 $ 15,999.18 Workings: a. Interest expenses = Beginning Notes Payable * Interest Rate Period Ending Date 2017 Interest expenses = $ 16,000.00 x 5% = $ 800.00 2018 Interest expenses = $ 12,288.00 x 5% = $ 614.40 2019 Interest expenses = $ 8,390.40 x 5% = $ 419.52 2020 Interest expenses = $ 4,297.92 x 5% = $ 214.90 b. Notes Payable Payment each period = Installment - Interest expenses Period Ending Date 2017 Notes Payable Paid = $ 4,512.00 - $ 800.00 = $ 3,712.00 2018 Notes Payable Paid = $ 4,512.00 - $ 614.40 = $ 3,897.60 2019 Notes Payable Paid = $ 4,512.00 - $ 419.52 = $ 4,092.48 2020 Notes Payable Paid = $ 4,512.00 - $ 214.90 = $ 4,297.10 c. Ending Notes Payable = Beginnng Notes Payable-Notes Paayble Paid during the period Period Ending Date 2017 Ending Notes Payable = $ 16,000.00 - $ 3,712.00 = $ 12,288.00 2018 Ending Notes Payable = $ 12,288.00 - $ 3,897.60 = $ 8,390.40 2019 Ending Notes Payable = $ 8,390.40 - $ 4,092.48 = $ 4,297.92 2020 Ending Notes Payable = $ 4,297.92 - $ 4,297.10 = $ 0.82