Question

On February 1, Willmar Corporation borrowed $100,000 from its bank by signing a 12 percent, 15-year note payable. The note calls for 180 monthly payments of $1,270. Each payment includes an interest and a principal component.

a. Compute the interest expense in February.

b. Compute the portion of Willmar’s March 31 payment that will be applied to the principal of the note. (Round your intermediate calculations and final answer to the nearest dollar amount.)

ONLY NEED ANSWER FOR C. BELOW.

c. Compute the carrying value of the note on April 30. (Round your intermediate calculations and final answer to the nearest dollar amount.)

A	Interest Expense	$1000
B	Principal	$273
C	Carrying Value

Answer 1

		Cash	interest	principal	CV
		paid	expense	amortized
					100,000
Feb	1	1270	1000	270	99,730
March	2	1270	997	273	99,457
April	3	1270	995	275	99,182
	A	interest expense			1000
	B	Principal			273
	C	Carrying value			99,182