Question

In: Accounting

Create a loan amortization table for a $100,000 2 year loan at 4.875% annual interest payable...

Create a loan amortization table for a $100,000 2 year loan at 4.875% annual interest payable semi-annually:

a) Calculate the payment amount.

b) Do the loan amortization table.

c) What is the journal entry to receive the third payment?

Expert Solution

Answer A)

Annual Interest Rate = 4.875%.

Semi Annual Interest Rate = 2.4375%

Using excel function 'PMT' and taking the following variables, payment amount (Installment amount) comes to $ 26,541.78

Rate = 2.4375%

nper = 4

PV = 100,000

0 = Payment to made at the end of the period

Alternative Way:

PVIFA @ 2.4375% for 4 half years comes to 3.7676.

Installment Amount = 100,000 / 3.7676 = 265,41.78

Answer B)

Loan Amortization Table:

Half Year	Beginning Loan Balance	Interest	Repayment	Ending Balance
1	1,00,000.00	2,437.50	26,541.78	75,895.72
2	75,895.72	1,849.96	26,541.78	51,203.90
3	51,203.90	1,248.10	26,541.78	25,910.21
4	25,910.21	631.56	26,541.78	(0.01)

Answer C)

Journal entry to receive the third payment

Loan A/c	Dr	25,293.68
Interest Expense on Loan A/c	Dr	1,248.10
Bank A/c	Cr		26,541.78

ekkarill92 answered 3 months ago

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