James Clark has just approached a venture capitalist for financing for his sailing school. The venture capitalist is willing to loan James $70,000 at a high-risk annual interest rate of 24%. The loan is payable over 3 years in monthly installments of $2,746.

Each payment includes principal and interest, calculated using the effective-interest method for amortizing debt. James receives the loan on May 1, 2007, which is the first day of his fiscal year. James makes the first payment on May 31, 2007.

Instructions

(a) Prepare an amortization schedule for the period from May 1, 2007, to August 31, 2007. Round all calculations to the nearest dollar.

(b) Prepare all journal entries for James Clark for the period beginning May 1, 2007, and ending July 31, 2007. Round all calculations to the nearest dollar.