Question

On January 1, Year 1, Beatie Co. borrowed $240,000 cash from Central Bank by issuing a five-year, 6 percent note. The principal and interest are to be paid by making annual payments in the amount of $56,975. Payments are to be made December 31 of each year, beginning December 31, Year 1.

a) Required Prepare an amortization schedule for the interest and principal payments for the five-year period.

Answer 1

Amortization Schedule:
Year	Beginning Notes Payable	Interest Expense	Annual Payment	Reduction of principal	Ending Notes Payable
	a	b=a*6%	c	d=c-b	e=a-d
1	$ 2,40,000.00	$ 14,400.00	$ 56,975.00	$ 42,575.00	$ 1,97,425.00
2	$ 1,97,425.00	$ 11,845.50	$ 56,975.00	$ 45,129.50	$ 1,52,295.50
3	$ 1,52,295.50	$   9,137.73	$ 56,975.00	$ 47,837.27	$ 1,04,458.23
4	$ 1,04,458.23	$   6,267.49	$ 56,975.00	$ 50,707.51	$     53,750.72
5	$     53,750.72	$   3,224.27	$ 56,975.00	$ 53,750.73	$              -0.00
Note:
In the year 5, $ 0.77 is adjusted in interest expense.