Question

Laverne purchased a new piece of equipment to be used in its new facility. The $355,000 piece of equipment was purchased with a $35,500 down payment and with cash received through the issuance of a $319,500, 7%, 5-year mortgage payable issued on January 1, 2017. The terms provide for annual installment payments of $77,923 on December 31.
Prepare an installment payments schedule for the first five payments of the notes payable. (Round answers to 0 decimal places)

Answer 1

Answer:

Yr. amount Interest payment balance

1. 319,500 22365. (77923). 263,942

2. 263,942.18,476. (77,923). 204,495

3. 204,495 14315. (77923). 140,887

4. 140,887. 9862 (77923). 72,826

5. 72826. 5098. (77,923). 1

Explanation:

The interest charge is on the total amount due at the end of the year which is assumed to have been made available to the debtor, the annual payment is deducted from the addition of interest and principal due and the balance due is brought forward to be defray in subsequent years. The balance is expected to show zero but the balance of one shown is a roundup error.