On January 1, 2020, ABC Company borrowed $200,000 from the bank. The loan is a 10-year...

On January 1, 2020, ABC Company borrowed $200,000 from the bank. The loan is
a 10-year note payable that requires semi-annual payments of $24,000 every
June 30 and December 31, beginning June 30, 2020. Assume the loan has a 20%
interest rate, compounded semi-annually.

Calculate the amount of the note payable at December 31, 2020 that would be
classified as a long-term liability.

Expert Solution

DATE	OPENING BALANCE	PAYMENT	INTEREST	PRINCIPLE	CLOSING BALANCE
01-01-2020	2,00,000.00	-	-	-	2,00,000.00
30-06-2020	2,00,000.00	24,000.00	20,000.00	4,000.00	1,96,000.00
31-12-2020	1,96,000.00	24,000.00	19,600.00	4,400.00	1,91,600.00
30-06-2021	1,91,600.00	24,000.00	19,160.00	4,840.00	1,86,760.00
31-12-2021	1,86,760.00	24,000.00	18,676.00	5,324.00	1,81,436.00

TOTAL LOAN BALANCE AS ON 31-12-2020			1,91,600.00
PRINCIPLE AMOUNT PAYABLE DURING 2021 ( SHORT TERM LIABILITY )	10,164.00	(4840+5324)
LONG TERM LIABILITY				1,81,436.00	(191600-10164)

SHORT TERM LIABILITY MEANS , ALL LIABILITIES OF THE BUSINESS THAT ARE TO BE SETTLED
IN CASH WITH IN THE FISCAL YEAR ...

ekkarill92 answered 1 year ago

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