Question

On January 1, 2017, Eagle borrows $33,000 cash by signing a four-year, 6% installment note. The note requires four equal payments of $9,524, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. Prepare an amortization table for this installment note. (Round all amounts to the nearest whole dollar.) Paviments (C) Period Ending Beginning Debit Interest Credit Ending Dobit Notes Payable Bance Cash Balance 33,000 $ $ 9.5245 2017 2018 Expense 1,980 1,527 1048 7,544 7997 25456 9.524 17.459 2019 17.459 $ $ 8,476 9.424 2020 8.903 541 8 983 5 9524 Total 5,096 $ 33,000 $ Commun 37.996

Answer 1

Solution Amount borrowed Interest rate Yearly Equal payments Number of equal payments $33,000 6.00% $9,524 Required: Amortization table for the installment note (A) Payments (B) (C) (D) 1 (E) Period Ending Beginning Credit Ending Date 2017 2018 Balance $33,000 $25,456 $17,459 $8,983 Debit Interest Expense $1,980 $1,527 $1,048 $541 $5,096 Debit Notes Payable $7,544 $7,997 $8,4761 $8,983 $33,000 Cash $9,524 $9,524 $9,5241 $9,524 $38,096 Balance $25,456 $17,459 $8,983 2020 Total Interest expense has been calculated using the following formula: Interest expense = Beginning Balance x Interest rate Debit notes payable has been calculated using the following formula: Debit notes payable = Credit cash - Debit interest Ending balance has been calculated using the following formula: Ending balance = Beginning balance - Debit notes payable Note: In fourth year, rounded off difference has been adjusted in the interest.