Exercise 10-14 - Reduction of Principal Balance $576,765...

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EXERCISE 10-14 (15–20 minutes) (a) Equipment ...................................................................... 576,765* Discount on Notes Payable ...................................... 223,235 Notes Payable ..................................................... 800,000 *PV of $160,000 annuity @ 12% for 5 years ($160,000 X 3.60478) = $576,765 (b) Interest Expense .......................................................... 69,212* Notes Payable ............................................................... 160,000 Discount on Notes Payable ........................... 69,212 Cash ....................................................................... 160,000 *(12% X $576,765) Year Note Payment 12% Interest
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Unformatted text preview: Reduction of Principal Balance 1/2/07 $576,765 12/31/07 $160,000 $69,212 $ 90,788 485,977 12/31/08 160,000 58,317 101,683 384,294 10-27 EXERCISE 10-14 (Continued) (c) Interest Expense. .......................................................... 58,317 Notes Payable. ............................................................... 160,000 Discount on Notes Payable. ........................... 58,317 Cash . ...................................................................... 160,000 (d) Depreciation Expense. ................................................ 57,677* Accumulated Depreciation . ............................ 57,677 *($576,765 ÷ 10)...
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