Answer:
Dr. Cr.
January 1, 2017
Cash $23,000
Account Payable $23,000
December 31, 2017
Account Payable $5,029
Interest Expense $2,070
Cash $7,099
December 31, 2018
Account Payable $5,482
Interest Expense $1,617
Cash $7,099
December 31, 2019
Account Payable $5,975
Interest Expense $1,124
Cash $7,099
December 31, 2020
Account Payable $6,514
Interest Expense $585
Cash $7,099
Explanation:
Installment of $7,099 is divided in interest and principal payments. As Interest payment is decreasing with the balance due is reducing each year due to principal payment with interest payment after paying interest the loan amount is zero after 4th installment. Loan Amortization schedule shows the amortization of loan and interest payment each year and their balances.
Loan Amortization schedule
Date Opening Interest @ 9% Principal Balance
January 1, 2017 $23,000 $23,000
Dec 31, 2017 $23,000 $2,070 $5,029 $17,971
Dec 31, 2018 $17,971 $1,617 $5,482 $12,489
Dec 31, 2019 $12,489 $1,124 $5,975 $6,514
Dec 31, 2020 $6,514 $585 $6,514 $0
