Question

1) On January 1, 2015 you take out a $16,000 3-year installment note to pay for a car. The interest rate is 7%. Payments are made semi annually and the payment. Is $1126.01. Please complete the table.

2) Record the Journal Entry for the 1st and 2nd Payments.

On January 1, 2015 you take out a $6,000 3-year Installment Note to pay for a car. The interest rate is 7%. Payments are made semi-annually and the payment per period is $1,126.01. Please complete the table. Payment Number Cash Payment Principal Interest Loan Balance oveWN

Answer 1

Loan amount = $6000

Interest rate = 7%

Payment per instalment = $1126.01

Payment number	cash payment	principal	Interest	loan balance
1	1126.01	916.01	210	5083.99
2	1126.01	948.01	178	4135.98
3	1126.01	981.25	144.76	3154.73
4	1126.01	1015.59	110.42	2139.14
5	1126.01	1051.14	74.87	1088
6	1126.01	1088	38.01	0

Interest calculations

1st = 6000× 7%× (6/12) = 210

2nd = 5083.99 × 7% × (6/12) = 178

3rd = 4135.98 x 7% x (6/12) = 144.76

4th = 3154.73 x 7% x (6/12) = 110.42

5th = 2139.14 x 7% x (6/12) = 74.87

6th = 1088 x 7% x (6/12) = 38.08

Journal entries

1st payment

Installment on note payable a/c...Dr $1126.01

To cash a/c $1126.01

(Being installment on note payable paid in cash)

2nd payment

Installment on note payable a/c....Dr $1126.01

To cash a/c $1126.01

(Being installment on note payable paid in cash)

these are all the information and calculations required to solve the above given question.

I hope, all the above mentioned information and calculations are useful and helpful to you.

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