Company A sells a machine to Company B on September 1 for $27,000. The down payment to be paid by Company B is $3,000. Company B must pay monthly minimum payments of $265. 12% interest rate per annum on the unpaid balance is deducted from each payment and the balance is applied to reduce the principal outstanding.

Company B makes the following payments to Company A:

October 1 $500

November 1 $500

December 1 $1,000

January 2 $500

Prepare a partial amortization schedule in order to answer the following question.

In preparing an amortization schedule, what is the balance at the end of December?

A.$22,712

B.$23,480

C.None of the other alternatives are correct

D.$23,740

E.$22,720