EXERCISE 10.6 Use of an Amortization Table LO10-4 Glen Pool Club, Inc., has an installment loan outstanding with a current balance of $150.000. The company makes monthly installments $1,543, which include interest computed at an annual rate of 6 percent. a. Prepare a partial amortization table showing (1) the original balance of this loan, and (2) the allocation of the first two monthly payments between interest expense and the reduction in the loan's unpaid balance. (Round to the nearest dollar.) b. Prepare the journal entry to record the second monthly payment. c. Will monthly interest increase, decrease, or stay the same over the life of the loan? Explain your answer, including why in this case the amount of principal included in the first two payments is the same.

EXERCISE 10.6 Use of an Amortization Table LO10-4 Glen Pool Club, Inc., has an installment loan outstanding with a current balance of $150.000. The company makes monthly installments $1,543, which include interest computed at an annual rate of 6 percent. a. Prepare a partial amortization table showing (1) the original balance of this loan, and (2) the allocation of the first two monthly payments between interest expense and the reduction in the loan's unpaid balance. (Round to the nearest dollar.) b. Prepare the journal entry to record the second monthly payment. c. Will monthly interest increase, decrease, or stay the same over the life of the loan? Explain your answer, including why in this case the amount of principal included in the first two payments is the same.

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter10: Liabilities: Current, Installment Notes, And Contingencies

Section: Chapter Questions

Problem 10.1EX: Current liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Bjorn for 85 during December...

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Current liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Bjorn for 85 during December 20Y5. These new subscribers will receive monthly issues, beginning in January 20Y6. In addition, the business had taxable income of 840,000 during the first calendar quarter of 20Y6. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y6. Prepare the current liabilities section of the balance sheet for Bon Nebo Co. on March 31, 20Y6.
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