Company A sells a machine to Company B on September 1 for $30,000. The down payment to be paid by Company B is $5,000. Company B must pay monthly minimum payments of $200.12% 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 on the loan to be used on September 1?

Multiple Choice

$30,000

$ 25000

$ 150000

$ none of the alternatives are correct

$ 5000