Which of the following statements about installment notes payable is correct? The amount of loan reduction...
Which of the following statements about installment notes payable is correct?
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The amount of loan reduction included in each payment decreases as more payments are made. |
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The interest expense on the installment note decreases as more payments are made. |
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The amount of interest decreases over the life of the note payable, but the amount of the loan balance stays the same. |
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The amount of amount of interest included in the payment is not related to the amount owed on the note payable. |
Homework Answers
correct answer is - the interest expense on the installment note decreases as more payments are made
explanation - over the term of installment loan, the amount of interest expense decreases each year and the amount of principle amount paid increases each year
Add Answer to:
Which of the following statements about installment notes
payable is correct?
The amount of loan reduction...
Notes payable (due in 5 years) Accounts payable Bonds payable (due in 10 years) Machinery $...
Notes payable (due in 5 years) Accounts payable Bonds payable (due in 10 years) Machinery $ 6,800 2,400 13,800 8,300 Discount on bonds payable Wages payable Interest payable (due in 2 weeks) Sales tax payable $2,300 1.150 575 525 Prepare the liabilities section of its classified balance sheet. (Negative amount(s) should be indicated by a minus sign.) WOOHOO CO. Liabilities Section of Balance Sheet December 31 Liabilities Current liabilities Total current liabilities 1 Long-term liabilities TO . I Total long-term...
Use the following to answer questions 17 - 19: V January 1, 2020, Hector Company obtained...
Use the following to answer questions 17 - 19: V January 1, 2020, Hector Company obtained a $50.000, four-year, 7% installment note from Sylvester Bank. The note requires four annual payments of $14,761, beginning on December 31, 2020. 17. Total interest expense Hector would report on its year end December 31, 2020 income statement is: $3,500 B. $14,761 C. $11,261 D. $0 The balance in Notes Payable at December 31, 2020, after the first payment is made would be: A....
3 Need this done asap. Thanks in advance! Journalizing Installment Notes On the first day of...
3
Need this done asap. Thanks in advance!
Journalizing Installment Notes On the first day of the fiscal year, a company issues $69,000, 9%, seven-year installment notes that have annual payments of $13,710. The first note payment consists of $6,210 of interest and $7,500 of principal repayment. a. Journalize the entry to record the issuance of the installment notes. If an amount box does not require an entry, leave it blank. b. Journalize the first annual note payment. If an...
Glen Pool Club, Inc., has a $144,000 mortgage liability. The mortgage is payable in monthly installments...
Glen Pool Club, Inc., has a $144,000 mortgage liability. The
mortgage is payable in monthly installments of $1,481, which
include interest computed at an annual rate of 12 percent (1
percent monthly). a. Prepare a partial amortization table showing
(1) the original balance of this loan, and (2) the allocation of
the first two monthly payments between interest expense and the
reduction in the mortgage’s unpaid balance. b. Prepare the journal
entry to record the second monthly payment. c. Will...
Click to watch the Concept Clip Installment Credit video and then answer the questions below. 1....
Click to watch the Concept Clip Installment Credit video and then answer the questions below. 1. Why is there more interest pald at the beginning of a loan than at the end? a. Banks want to recoup at the beginning the money they loaned. b. Interest is carried over each month and recalculated, thus increasing the percentage. C. At the beginning of the loan, the principal balance is larger than it is at the end. d. The interest percentage rate...
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable....
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows: 106,000 106,000 Cost of asset Amount Financed Annual Interest Rate Installment loan term Payments are made 2 years 12 times per year 9.) What is the total amount of interest that will be paid on the note payable over the two year period? » What is the total amount of Interest that will be paid on the nato payable...
8.) Calculate the periodic payment on the note payable. 9.) What is the total amount of...
8.) Calculate the periodic payment on the note payable.
9.) What is the total amount of interest that will be paid on
the note payable over the two year period?
10.) If the company wishes to get the loan paid off in ONE year
instead what will the new quarterly payments be?
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows: YOU WILL NEED THE KIESO PRESENT VALUE...
8. Calculating an installment loan payment using simple interest Calculating the Loan Payment on a Simple-Interest...
8. Calculating an installment loan payment using simple interest Calculating the Loan Payment on a Simple-Interest Installment Loan Instaliment loans allow borrowers to repay the loan with periodic payments over time. They are more common than single-payment loans because it is easier for most people to pay a fixed amount periodically (usually monthly) than budget for paying one big amount in the future. Interest on installment loans may be computed using the simple interest method or the add-on method. For...
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable....
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows: Cost of asset Amount Financed Annual Interest Rate Installment loan term Payments are made 106,000 106,000 12% 2 years 12 times per year 8.) Calculate the monthly payment on the note payable Page 2
Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Montague Inc.,...
Entries for Bonds Payable and Installment Note Transactions
The following transactions were completed by Montague Inc.,
whose fiscal year is the calendar year:
Year 1
July 1.
Issued $7,800,000 of five-year, 9% callable bonds dated July 1,
Year 1, at a market (effective) rate of 10%, receiving cash of
$7,498,854. Interest is payable semiannually on December 31 and
June 30.
Oct. 1.
Borrowed $170,000 by issuing a 10-year, 8% installment note to
Intexicon Bank. The note requires annual payments of...
Notes payable (due in 5 years) Accounts payable Bonds payable (due in 10 years) Machinery $ 6,800 2,400 13,800 8,300 Discount on bonds payable Wages payable Interest payable (due in 2 weeks) Sales tax payable $2,300 1.150 575 525 Prepare the liabilities section of its classified balance sheet. (Negative amount(s) should be indicated by a minus sign.) WOOHOO CO. Liabilities Section of Balance Sheet December 31 Liabilities Current liabilities Total current liabilities 1 Long-term liabilities TO . I Total long-term...
Use the following to answer questions 17 - 19: V January 1, 2020, Hector Company obtained a $50.000, four-year, 7% installment note from Sylvester Bank. The note requires four annual payments of $14,761, beginning on December 31, 2020. 17. Total interest expense Hector would report on its year end December 31, 2020 income statement is: $3,500 B. $14,761 C. $11,261 D. $0 The balance in Notes Payable at December 31, 2020, after the first payment is made would be: A....
3
Need this done asap. Thanks in advance!
Journalizing Installment Notes On the first day of the fiscal year, a company issues $69,000, 9%, seven-year installment notes that have annual payments of $13,710. The first note payment consists of $6,210 of interest and $7,500 of principal repayment. a. Journalize the entry to record the issuance of the installment notes. If an amount box does not require an entry, leave it blank. b. Journalize the first annual note payment. If an...
Glen Pool Club, Inc., has a $144,000 mortgage liability. The
mortgage is payable in monthly installments of $1,481, which
include interest computed at an annual rate of 12 percent (1
percent monthly). a. Prepare a partial amortization table showing
(1) the original balance of this loan, and (2) the allocation of
the first two monthly payments between interest expense and the
reduction in the mortgage’s unpaid balance. b. Prepare the journal
entry to record the second monthly payment. c. Will...
Click to watch the Concept Clip Installment Credit video and then answer the questions below. 1. Why is there more interest pald at the beginning of a loan than at the end? a. Banks want to recoup at the beginning the money they loaned. b. Interest is carried over each month and recalculated, thus increasing the percentage. C. At the beginning of the loan, the principal balance is larger than it is at the end. d. The interest percentage rate...
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows: 106,000 106,000 Cost of asset Amount Financed Annual Interest Rate Installment loan term Payments are made 2 years 12 times per year 9.) What is the total amount of interest that will be paid on the note payable over the two year period? » What is the total amount of Interest that will be paid on the nato payable...
8.) Calculate the periodic payment on the note payable.
9.) What is the total amount of interest that will be paid on
the note payable over the two year period?
10.) If the company wishes to get the loan paid off in ONE year
instead what will the new quarterly payments be?
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows: YOU WILL NEED THE KIESO PRESENT VALUE...
8. Calculating an installment loan payment using simple interest Calculating the Loan Payment on a Simple-Interest Installment Loan Instaliment loans allow borrowers to repay the loan with periodic payments over time. They are more common than single-payment loans because it is easier for most people to pay a fixed amount periodically (usually monthly) than budget for paying one big amount in the future. Interest on installment loans may be computed using the simple interest method or the add-on method. For...
Problem #2: Installment Note Preferred Corporation purchases an asset and finances it with a note payable. Information regarding the transaction follows: Cost of asset Amount Financed Annual Interest Rate Installment loan term Payments are made 106,000 106,000 12% 2 years 12 times per year 8.) Calculate the monthly payment on the note payable Page 2
Entries for Bonds Payable and Installment Note Transactions
The following transactions were completed by Montague Inc.,
whose fiscal year is the calendar year:
Year 1
July 1.
Issued $7,800,000 of five-year, 9% callable bonds dated July 1,
Year 1, at a market (effective) rate of 10%, receiving cash of
$7,498,854. Interest is payable semiannually on December 31 and
June 30.
Oct. 1.
Borrowed $170,000 by issuing a 10-year, 8% installment note to
Intexicon Bank. The note requires annual payments of...
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