Question

Cullumber Electronics issues a $416,000, 5%, 15-year mortgage note on December 31, 2019. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of $53,874. Payments are due on December 31.

Prepare an installment payments schedule for the first 4 years. (Round answers to 0 decimal places, e.g. 15,250.)

Answer 1

Solution:

Note Amortization Schedule - Cullumber Electronics
Date	Debit Interest expense	Cash Payment	Decrease in Balance	Carrying value of Note
31-Dec-19				$416,000
31-Dec-20	$20,800	$53,874	$33,074	$382,926
31-Dec-21	$19,146	$53,874	$34,728	$348,198
31-Dec-22	$17,410	$53,874	$36,464	$311,734
31-Dec-23	$15,587	$53,874	$38,287	$273,447