Question

Great Adventures Problem AP9-1 Tony's favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, "I've always wanted to start a camp where families could get away and spend some quality time together. If we just had the money, I know this would be the perfect place." On November 1, 2022, Great Adventures purchased the land by issuing a $450,000, 6%, 10-year installment note to the seller. Payments of $4,996 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $4,996 includes both interest expense and principal payments (.e., reduction of the loan amount). Late that night Tony exclaimed, "We now have land for our new camp: this has to be the best news ever!" Suzie said, "There's something else I need to tell you. I'm expecting!" They decided right then, if it was a boy, they would name him Venture.

Answer 1

Refer the image of excel sheet for computation

Principal Amount of Loan = $450,000 Rate of Interest = 6% Monthly Rate of Interest = 0.5% Month End Nov, 2022 Dec, 2022 Principal Amt at Beginning of Month Installment Interest for the month Principal Amount Repaid Outstanding Balance 450000| 4996 2250 2746 447254 447254 4996 2236.27 2759.73 444494.27 Total 9992 4486.27 5505.73 Jan, 2023 Feb, 2023 Mar, 2023 Apr, 2023 May, 2023 Jun, 2023 Jul, 2023 Aug, 2023 Sep, 2023 Oct, 2023 Nov, 2023 Dec, 2023 444494.27 441720.7414 438933.3451 436132.0118 433316.6718 430487.2552 427643.6915 424785.9099 421913.8395 419027.4087 416126.5457 413211.1785 Total 4996 4996 4996 4996 4996 4996 4996 4996 4996 4996 4996 4996 59952 2222.47135 2208.603707 2194.666725 2180.660059 2166.583359 2152.436276 2138.218457 2123.92955 2109.569197 2095.137043 2080.632729 2066.055892 25738.96434 2773.52865 2787.396293 2801.333275 2815.339941 2829.416641 2843.563724 2857.781543 2872.07045 2886.430803 2900.862957 2915.367271 2929.944108 34213.03566 441720.7414 438933.3451 436132.0118 433316.6718 430487.2552 427643.6915 424785.9099 421913.8395 419027.4087 416126.5457 413211.1785 410281.2343

Current Liability will be the amount of loan repayable within a period of 12 months i.e, payable from Jan, 2023 to Dec, 2023. Therefore Current Liabilities will amount to $34,213

Long Term Liabilities as on Dec 31, 2022 will be amount of loan to be repaid after a period of one year. Hence the amount to be stated as Long Term Liability shall be $410,281