Dan Dayle started a business by issuing an $83,000 face value note to First State Bank on January 1, 2018. The note had a 6 percent annual rate of interest and a five-year term. Payments of $19,704 are to be made each December 31 for five years. RequiredWhat portion of the December 31, 2018, payment is applied to interest expense and principal?What is the principal balance on January 1, 2019?What portion of the December 31, 2019, payment is applied to interest expense and principal?

Interest is computed as per the following formula Interest=Principal*rate*term

Answered: Dan Dayle started a business by issuing…

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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Dan Dayle started a business by issuing an $83,000 face value note to First State Bank on January 1, 2018. The note had a 6 percent annual rate of interest and a five-year term. Payments of $19,704 are to be made each December 31 for five years.

Required

What portion of the December 31, 2018, payment is applied to interest expense and principal?
What is the principal balance on January 1, 2019?
What portion of the December 31, 2019, payment is applied to interest expense and principal?

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