Question

Randy Industries purchased a supply of electronic components from Tomorrow Corporation on October 31,2021.In payment for the$1,060,000 million purchase,Randy industries issued a 1-year

installment note to be paid in equal monthly payments of 94,180 at the end of each month.The payments include interest at the rate of 12%.What is the balance of notes payable on December 31,

2021 balance sheet?

Answer 1

Number of monthly payments done in 2021	2	months
Balance number of payments left on December 31, 2021 = 12 - Number of monthly payments done in 2021 = 12 - 2 =	10	months
n = 10
r = 12%/12	1%
Balance notes payable on December 31,2021 = Monthly payment * (1-(1+r)^-n)/r = 94180 * (1-(1+1%)^-10)/1% =	892007