Question

On January 1, Year 1, Beatie Co. borrowed $220,000 cash from Central Bank by issuing a five-year, 7 percent note. The principal and interest are to be paid by making annual payments in the amount of $53,656. Payments are to be made December 31 of each year, beginning December 31, Year 1. RequiredPrepare an amortization schedule for the interest and principal payments for the five-year period. (Round your answers to the nearest dollar amount.)

Answer 1

• Amortisation schedule, as asked is provided below:

Date	Beginning Principal Outstanding	Interest Expense	Cash Payment	Reduction in Principal	Ending Principal Outstanding balance
	[A]	[B = A x 7%]	[C]	[D = C - B]	[E = A - D]
31 Dec Year 1	$                                                           220,000	$                15,400	$                53,656	$                   38,256	$        181,744
31 Dec Year 2	$                                                           181,744	$                12,722	$                53,656	$                   40,934	$        140,810
31 Dec Year 3	$                                                           140,810	$                   9,857	$                53,656	$                   43,799	$          97,011
31 Dec Year 4	$                                                             97,011	$                   6,791	$                53,656	$                   46,865	$          50,146
31 Dec Year 5	$                                                             50,146	$                   3,510	$                53,656	$                   50,146	$                    -