Cezto.mheducation.com/hm.tpx value 3.20 points Exercise 10-11 Installment note e

Question

Cezto.mheducation.com/hm.tpx value 3.20 points Exercise 10-11 Installment note entries LO C1 On January 1, 2015, Eagle borrows $26,000 cash by signing a four-year, 8% installment note. The note requires four equal total payments of accrued interest and principal on December 31 of each year from 2015 through 2018. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest dollar amount. Round all table values to 4 decimal places, and use the rounded table values in calculations.) Prepare the journal entries for Eagle to record the loan on January 1, 2015, and the four payments from December 31, 2015, through December 31, 2018 Interest Rate Notes Payable Table Value Cash Paid 8.090 $ 26,000/ 3.3121 7,850 1105 AM O Type here to search rP ?Dai ENG 4/28/2018

Explanation / Answer

Using present value of annuity formula , we can find out the Yearly loan payment. Journal Entries Present value of annuity = P*{[1-(1+r)^-n]/r} Date Account Titles Debit Credit Present value of annuity = loan amount = $26000 Jan.01,2015 Cash $26,000.00 P = Annual loan payment = ? Note Payable $26,000.00 r = rate of interest per annum = 8% n = no.of years = 4 Dec.31,2015 Interest Expense $2,080.00 Note Payable $5,769.94 26000 = P*{[1-(1+0.08)^-4]/0.08} Cash $7,849.94 26000 = P * 3.312127 P = 7849.94 Dec.31,2016 Interest Expense $1,618.40 Annual loan payment = $7849.94 Note Payable $6,231.54 Cash $7,849.94 Loan amortization table Year Annual payment Towards Interest Towards Principal Outstanding loan 0 $26,000.00 Dec.31,2017 Interest Expense $1,119.88 2015 $7,849.94 $2,080.00 $5,769.94 $20,230.06 Note Payable $6,730.06 2016 $7,849.94 $1,618.40 $6,231.54 $13,998.52 Cash $7,849.94 2017 $7,849.94 $1,119.88 $6,730.06 $7,268.47 2018 $7,849.94 $581.48 $7,268.46 $0.00 Dec.31,2018 Interest Expense $581.48 Note Payable $7,268.46 Cash $7,849.94

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---