Question

Required information [The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $70,000 face value, four-year term note that had an 4 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,284 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $34,300 cash per year. Required a. Prepare an amortization schedule for the four-year period. (Round your answers to the nearest whole dollar amount.) BROWN CO. Amortization Schedule Principal Balance Cash Payments Applied to on January 1 December 31 Interest Year Applied to Principal Principal Balance End of Period 2018 2019 2020 2021

Answer 1

BROWN CO.
Amortization Schedule
Year	Principal Balance January 1	Cash Payments December 31	Applied to Interest	Applied to Principal	Principal Balance End of Period
2018	70,000	19,284	70,000 x 4% = 2,800	19,284 - 2,800 = 16,484	70,000 - 16,484 = 53,516
2019	53,516	19,284	53,516 x 4% = 2,141	19,284-2,141 = 17,143	53,516-17,143 = 36,373
2020	36,373	19,284	36,373 x 4% = 1,455	19,284- 1,455 = 17,829	36,373-17,829 = 18,544
2021	18,544	19,284	740	18,544	18,544-18,544 = 0

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