Michael purchased a new piece of equipment to be used in its new facility. The $380,000 piece of equipment was purchased with a $57,000 down payment and with cash received through the issuance of a $323,000, 8%, 5-year mortgage payable issued on January 1, 2022. The terms provide for annual installment payments of $80,897 on December 31. Year Period 1 2 January 1, 2022 Year 2022 Year 2023 Cash Interest Expense Paid (8% Interest Rate) 80,897 80,897 Principal Reduction Note Payable Balance 323,000
Michael purchased a new piece of equipment to be used in its new facility. The $380,000 piece of equipment was purchased with a $57,000 down payment and with cash received through the issuance of a $323,000, 8%, 5-year mortgage payable issued on January 1, 2022. The terms provide for annual installment payments of $80,897 on December 31. Year Period 1 2 January 1, 2022 Year 2022 Year 2023 Cash Interest Expense Paid (8% Interest Rate) 80,897 80,897 Principal Reduction Note Payable Balance 323,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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