Dan Dayle started a business by issuing an $85,000 face value note to First State Bank on January 1, Year 1. The note had an 7 percent annual rate of interest and a five-year term. Payments of $20,731 are to be made each December 31 for five years. Required What portion of the December 31, Year 1, payment is applied to interest expense and principal? What is the principal balance on January 1, Year 2? What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)
Dan Dayle started a business by issuing an $85,000 face value note to First State Bank on January 1, Year 1. The note had an 7 percent annual rate of interest and a five-year term. Payments of $20,731 are to be made each December 31 for five years. Required What portion of the December 31, Year 1, payment is applied to interest expense and principal? What is the principal balance on January 1, Year 2? What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 11E
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Question
Dan Dayle started a business by issuing an $85,000 face value note to First State Bank on January 1, Year 1. The note had an 7 percent annual rate of interest and a five-year term. Payments of $20,731 are to be made each December 31 for five years.
Required
What portion of the December 31, Year 1, payment is applied to interest expense and principal? What is the principal balance on January 1, Year 2? What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)
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