On August 1, a $42,000, 7%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $16,004.17. The entry to record the first payment on July 31 would include:a. $14,000.00.

b. $16,004.17.

c. $14,800.00.

d. $14,400.00.

Question

Kimberly

Business

7 September, 01:23

On August 1, a $42,000, 7%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $16,004.17. The entry to record the first payment on July 31 would include:a. $14,000.00.

b. $16,004.17.

c. $14,800.00.

d. $14,400.00.

+4

Answers (1)

Know the Answer?

Rosemary Oconnell · Answer 1

b. $16,004.17

Explanation:

The bond pays annual interest of 7% over the 3 years. The annuity factor at 7% for 3 years is 2.6243. The amount of bond is divided by annuity factor to calculate the annual payment of bond. The payment includes bond principal repayment and interest payment. The first payment on July 31 will be for $16,004.17.

On August 1, a $42,000, 7%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $16,004.17. The entry to record the first payment on July 31 would include:a. $14,000.00.b. $16,004.17.c. $14,800.00.d. $14,400.00.

On August 1, a $42,000, 7%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $16,004.17. The entry to record the first payment on July 31 would include:a. $14,000.00.

b. $16,004.17.

c. $14,800.00.

d. $14,400.00.