Question

On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The first three are to be $26,000 each, and will be paid on December 31, 2021, 2022, and 2023. The last three are to be $41,000 each and will be paid on December 31, 2024, 2025, and 2026. Montgomery borrowed other money at a 12% annual rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. At what amount should Montgomery record the note payable and corresponding cost of the building on January 1, 2021? 2. How much interest expense on this note will Montgomery recognize in 2021? (For all requirements, Round your final answers to nearest whole dollar amount.) 1. Amount recorded 2. Interest expense

Answer 1

Ansaer Given ate payable and cast bilding gau ,eau D Calculahon step-i Preseut value fauuely- p -+ Lasts payady 12% O.12 41c00 2.4D1831 .preseut valae Auuaig= $98475 . step-2i preseut vakue = preseut value fauuuihy $98475 X x preseut value 4j $98,H75 x O 71178 : preseut value stepza eseutvalue Amucelt p LFirats paymenta 70093 - 26000xej3 O.12 preseut value 4 aunui=462448 Preseut value all paymeuts preseut value éf first 3pay + preseut valusf Last 3payeuls 62,448tops) +$70093 steps) 132,54 notes payable aud Cast biilatirng should be vecordedat 132.,54 e Delermin Ha Inlevest enpeue ou ti wots for year Lol. Intarest en peuu= Cost & building « Inlavestsate $132,54I X 17 . Tnlerest er peuge = 15905