Tony\'s favorite memories of his childhood were the times he spent with his dad
ID: 2464285 • Letter: T
Question
Tony's favorite memories of his childhood were the times he spent with his dad at camp. Tony was daydreaming of those days a bit as he and Suzie jogged along a nature trail and came across a wonderful piece of property for sale. He turned to Suzie and said, "I've always wanted to start a camp where families could get away and spend quality time together. If we just had the money, I know this would be the perfect place." They called severla banks and on January 1, 2017, Great Adventures obtained a $520,000, 6% 8-year installment loan from Summit bank. Monthly payments of $6, 834 are required at the end of each month over the life of a 8-year loan. Each monthly payment of $6,834 includes both interest expense and principal payments (i.e., reduction of the loan amount.)
Late that night tony exclaimed, "520,000 for our new camp, this has to be the best news ever."
1. Complete the first three rows of an amortization table
2 .Record the note payable on January 1, 2017, and the first two payments on January 31, 2017, and February 28, 2017. (Record the issuance of note payable)
Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 01/01/2017 01/31/2017 02/28/2017Explanation / Answer
1
2
3
4
5
Date
Cash Paid
Interest Expense @ 6%
Decrease In Carrying Value
Carrying Value
Monthly Payment
column x Interest rate
2-3
Previous Carrying Value- 4
1/1/2017
520,000
1/31/2017
6,834
2,600
4,234
515,766
1/28/2017
6,834
2,579
4,255
511,511
Record the note Payable on Jan 1,2017
Jan 1 2017
Dr Cash $520,000
Cr Notes payable $520,000
Jan 31 2017
Dr Interest Expense $2,600
Dr Notes Payable (Bal fig) $4,234
Cr Cash ( Monthly payment) $6,834
Recording of First Intallment
Feb 28 2017
Dr Interest Expense $2,579
Dr Notes Payable (Bal fig) $4,255
Cr Cash ( Monthly payment) $6,834
Recording of second Intallment
1
2
3
4
5
Date
Cash Paid
Interest Expense @ 6%
Decrease In Carrying Value
Carrying Value
Monthly Payment
column x Interest rate
2-3
Previous Carrying Value- 4
1/1/2017
520,000
1/31/2017
6,834
2,600
4,234
515,766
1/28/2017
6,834
2,579
4,255
511,511