Question

Exercise 10-2A Amortization schedule for an installment note LO 10-1

On January 1, Year 1, Beatie Co. borrowed $330,000 cash from Central Bank by issuing a five-year, 6 percent note. The principal and interest are to be paid by making annual payments in the amount of $78,341. Payments are to be made December 31 of each year, beginning December 31, Year 1.

Required
Prepare an amortization schedule for the interest and principal payments for the five-year period. (Round your answers to the nearest dollar amount.)

PLEASE INCLUDE ALL WORK
Exercise 10-2A Amortization schedule for an installment note LO 10-1 On January 1, Year 1, Beatie Co. borrowed $330,000 cash from Central Bank by issuing a five-year, 6 percent note. The principal and interest are to be paid by making annual payments in the amount of $78,341. Payments are to be made December 31 of each year, beginning December 31, Year 1 Required Prepare an amortization schedule for the interest and principal payments for the five-year period. (Round your answers to the nearest dollar amount.) BEATIE CO Amortization Schedule $330,000, 5-Yr. Term Note, 6% Interest Rate Cash Pay Dec. 31 Prin. Bal on Jan.1 Applied to Interest Applied to Principal Prin. Bal End of Period Year Year 1 Year 2 Year 3 Year 4 Year 5

Answer 1

Answer:

BEATIE CO.

Amortization Schedule

$330,000, 5 Yr Term Note, 6% Interest Rate

Year	Prin. Bal. On Jan. 1	Cash Pay. Dec. 31	Applied to Interest	Applied to Principal	Prin. Bal. End of Period
Yr 1	330,000	78,341	19,800	58,541	271,459
Yr 2	271,459	78,341	16,288	62,053	209,406
Yr 3	209,406	78,341	12,564	65,777	143,629
Yr 4	143,629	78,341	8,618	69,723	73,906
Yr 5	73,906	78,341	4,435	73,906	0

Interest Expense = Prin. Bal. On Jan 1 * Interest Rate

Applied to Principal = Cash Payment - Interest Expense

Principal Bal. On Dec 31 = Prin. Bal on Jan 1 - Applied to Principal