Tony’s favorite memories of his childhood were the times he spent with his dad a
ID: 2583074 • 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 some quality time together. If we just had the money, I know this would be the perfect place.” They called several banks and on January 1, 2020, Great Adventures obtained a $450,000, 6%, 10-year installment loan from Summit Bank. Payments of $4,996 are required at the end of each month over the life of the 10-year loan. Each monthly payment of $4,996 includes both interest expense and principal payments (i.e., reduction of the loan amount).
Late that night Tony exclaimed, “$450,000 for our new camp, this has to be the best news ever.” Suzie snuggled close and said, “There’s something else I need to tell you, Tony, I’m expecting!” They decided right then, if it was a boy, they would name him Venture.
Required:
1. Complete the first three rows of an amortization table.
2. Record the note payable on January 1, 2020, and the first two payments on January 31, 2020, and February 28, 2020. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
Explanation / Answer
Date Cash payment Interest expense Reduction in principal Ending balance January 1, 2020 450000 January 31, 2020 4996 2250 2746 447254 February 28, 2020 4996 2236 2760 444494 January 1, 2020 Cash 450000 Notes payable 450000 January 31, 2020 Intetest expense 2250 Notes payable 2746 Cash 4996 February 28, 2020 Intetest expense 2236 Notes payable 2760 Cash 4996