Question
6. On January 1, Wonder Water borrowed $300,000 for 5 years at 4.5% to finance expansion. Fixed principal payments are to be made quarterly beginning
6. On January 1, Wonder Water borrowed $300,000 for 5 years at 4.5% to finance expansion. Fixed principal payments are to be made quarterly beginning Mar 1. Below is an instalment schedule for Wonder Water. (13 marks)
WONDER WATER
INSTALMENT PAYMENT SCHEDULE- FIXED PRINCIPAL PAYMENTS
| Interest Period | Cash Pmt | Interest Expense | Reduction of Principal | Principal |
| Jan 1 |
|
|
| 300,000 |
| Mar 1 | ? | 3,375 | 5,000 | 295,000 |
| Jun 1 | 8,319 | ? | 5,000 | ? |
| Sep 1 | ? | 3,263 | ? | 285,000 |
| Dec 1 | ? | ? | 5,000 | ? |
Instructions
(a) Determine the missing values (round to the nearest dollar).
(b) Prepare the journal entries for the payments made on March 1 and Sept 1.
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Cases In Auditing
Authors: Josephine Maltby
2nd Edition
1853963127, 978-1853963124
