Currie Company borrowed $29,000 from the Sierra Bank by issuing an 11% three-year note. Currie agreed...
Currie Company borrowed $29,000 from the Sierra Bank by issuing an 11% three-year note. Currie agreed to repay the principal and interest by making annual payments in the amount of $11,867. Based on this information, the amount of the interest expense associated with the second payment would be: (Round your answer to the nearest
Homework Answers
| Date | Cash payment | Interest expense | Principal payment | Ending balance of Note |
| 1st year beginning | 29,000 | |||
| 1st year end | 11,867 | 29,000 x 11% = 3,190 | 11867-3,190 = 8,677 | 29,000-8,677 = 20,323 |
| 2nd year end | 11,867 | 20,323 x 11% = 2,236 | 11,867-2,236 = 9,631 | 20,323-9,631 = 10,692 |
Interest expense associated with second payment = $2,236
If interest expense is rounded to nearest cent, then interest expense associated with second payment will be $2,235.53.
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