1) | ||||
Date | Account Titles and Explanation | Debit | Credit | |
1-Jan-21 | Equipment (price determined below) | $ 81,382.00 | ||
Discount on notes payable (difference) | $ 18,618.00 | |||
Notes payable (face amount) | $ 100,000.00 | |||
Interest | $100000 x 5% x PVOA(4, 11%) = $5000 x 3.1024 | $ 15,512.00 | ||
Principal | $10000 x PV(4,11%) = 100000 x .6587 | $ 65,870.00 | ||
Present value (price) of the note | $ 81,382.00 | |||
2) | ||||
Period | Cash Payment | Effective Interest Prior Balance x 11% | Increase in Balance | Outstanding Balance |
1-Jan | $ 81,382.00 | |||
31-Dec-21 | 5000 | $ 8,952.02 | $ 3,952.02 | $ 85,334.02 |
31-Dec-22 | 5000 | $ 9,386.74 | $ 4,386.74 | $ 89,720.76 |
31-Dec-23 | 5000 | $ 9,869.28 | $ 4,869.28 | $ 94,590.05 |
31-Dec-24 | 5000 | $ 10,409.96 | $ 5,409.96 | $ 100,000.00 |
Total | 20000 | $ 38,618.00 | $ 18,618.00 | |
3) | ||||
Date | Account Titles and Explanation | Debit | Credit | |
31-Dec-23 | Interest expense | $ 9,869.28 | ||
Discount on notes payable (difference) | $ 4,869.28 | |||
Cash | $ 5,000.00 | |||
4) | Installment Payment = present value of notes /PVOA(4,11%) | |||
Installment Payment = $81382/3.1024 | $ 26,231.95 | |||
5) | ||||
Period | Cash Payment | Effective Interest Prior Balance x 11% | Decrease in Balance | Outstanding Balance |
1-Jan | $ 81,382.00 | |||
31-Dec-21 | $ 26,231.95 | $ 8,952.02 | $ (17,279.93) | $ 64,102.07 |
31-Dec-22 | $ 26,231.95 | $ 7,051.23 | $ (19,180.72) | $ 44,921.35 |
31-Dec-23 | $ 26,231.95 | $ 4,941.35 | $ (21,290.60) | $ 23,630.75 |
31-Dec-24 | $ 26,231.95 | $ 2,601.20 | $ (23,630.75) | $ 0.00 |
Total | 104927.7978 | $ 23,545.80 | $ (81,382.00) | |
6) | ||||
Date | Account Titles and Explanation | Debit | Credit | |
31-Dec-23 | Interest expense | $ 4,941.35 | ||
Notes payable (difference) | $ 21,290.60 | |||
Cash | $ 26,231.95 |
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