Question

Thomas purchased a new piece of equipment to be used in its new facility. The $355,000 piece of equipment was purchased with a $35,500 down payment and with cash received through the issuance of a $319,500, 7%, 5-year mortgage payable issued on January 1, 2022. The terms provide for annual installment payments of $77,923 on December 31 X Your answer is incorrect. Prepare an installment payments schedule for the first five payments of the notes payable. (Round answers to 0 decimal places, eg. 125.) Principal Annual Reduction Cash Interest Interest Period Payment Expense of Principal Balance $ $ $ Issue Date 1 2 3 4 5

Answer 1

SOLUTION : 1
Period	Cash Payment	Interest Expenses	Reduction of Princpal	Balance Princpal
Issue Date				$                   3,19,500
1	$                       77,923	$                                                                22,365	$                           55,558	$                   2,63,942
2	$                       77,923	$                                                                18,476	$                           59,447	$                   2,04,495
3	$                       77,923	$                                                                14,315	$                           63,608	$                   1,40,887
4	$                       77,923	$                                                                  9,862	$                           68,061	$                      72,826
5	$                       77,923	$                                                                  5,098	$                           72,825	$                                 0
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	Dec, 31	Interest Expenss	$22,365
		Notes Payable	$55,558
		Cash		$77,923
	THOMAS
	BALANCE SHEET (PARTIAL )
	AS ON DECEMBER 31, 2022
	CURRENT LIABILITIES:		TOTAL
	Notes Payable		$                           59,447
	LONG TERM LIABILITIES:
	Notes Payable		$                        2,04,495
	TOTAL LIABILITIES		$                        2,63,942