Recording Entries for an Installment Note Payable On January 1, 2020, a borrower signed a long-term note, face amount, $100,000; time to maturity, three years; stated rate of interest, 8%. The market rate of interest of 10% determined the cash received by the borrower. The note will be paid in three equal annual installments of $38,803 each December 31 (which is also the end of the accounting period for the borrower). Required a. Compute the cash received by the borrower and prepare a debt amortization schedule. • Note: Round your answer to the nearest whole dollar. 1. Compute the cash received by the borrower. $ 80,000 2. Prepare a debt amortization schedule.
Recording Entries for an Installment Note Payable On January 1, 2020, a borrower signed a long-term note, face amount, $100,000; time to maturity, three years; stated rate of interest, 8%. The market rate of interest of 10% determined the cash received by the borrower. The note will be paid in three equal annual installments of $38,803 each December 31 (which is also the end of the accounting period for the borrower). Required a. Compute the cash received by the borrower and prepare a debt amortization schedule. • Note: Round your answer to the nearest whole dollar. 1. Compute the cash received by the borrower. $ 80,000 2. Prepare a debt amortization schedule.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Recording Entries for an Installment Note Payable
On January 1, 2020, a borrower signed a long-term note, face amount, $100,000; time to maturity, three years; stated rate of interest, 8%. The market
rate of interest of 10% determined the cash received by the borrower. The note will be paid in three equal annual installments of $38,803 each
December 31 (which is also the end of the accounting period for the borrower).
Required
a. Compute the cash received by the borrower and prepare a debt amortization schedule.
Note: Round your answer to the nearest whole dollar.
1. Compute the cash received by the borrower.
$ 80,000
2. Prepare a debt amortization schedule.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe3e8e93-7837-41e5-bd55-b3c8f93a8315%2F17d7403b-a563-4742-909f-bc8af2771b97%2Fz4cegprv_processed.png&w=3840&q=75)
Transcribed Image Text:Recording Entries for an Installment Note Payable
On January 1, 2020, a borrower signed a long-term note, face amount, $100,000; time to maturity, three years; stated rate of interest, 8%. The market
rate of interest of 10% determined the cash received by the borrower. The note will be paid in three equal annual installments of $38,803 each
December 31 (which is also the end of the accounting period for the borrower).
Required
a. Compute the cash received by the borrower and prepare a debt amortization schedule.
Note: Round your answer to the nearest whole dollar.
1. Compute the cash received by the borrower.
$ 80,000
2. Prepare a debt amortization schedule.
Expert Solution
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Step 1
Cash received by the borrower is the summation of the present value of all the installments to be paid on December 31.
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