Question

On January 1, 2019, Pens, Inc. issued a 2% installment note to Green Bank in the amount of $190,000. The note requires annual payments for 4 years. Determine the amount of the annual payment, and write your answer on this line. Round to the nearest whole dollar when necessary. You must show your work in the space provided below for any credit to be awarded. Use the present value table provided in class (also posted in our course D2L shell with the CH14 materials) to make the calculation. (Use the numbers exactly as they appear in the table.) Record the annual payments that will be made each December 31.

Answer 1

2 note year 190,000 annual payment interest principal NOWN 47500 47500 47500 47500 3800 2850 1900 950 43,700 44,650 45,600 46,550 190,000 142,500 95,000 47,500 0 debit credit 3800 43,700 10 jornal entry 11 year 1 12 31-Dec interest expense 13 instalment note 14 to cash 15 16 year 2 interest expense 17 instalment note 18 to cash 47500 2850 44,650 47500 19 year 3 interest expense instalment note to cash 1900 45,600 47500 year 4 interest expense instalment note to cash 950 46,550 47500 annual payment mde for note is $47500

interest is calculated as 2% of remaining balance

principal is calculated as installment - interest

installment = 190,000 / 4 = $47500

remaining balance = 190,000 - 47500 for each year