Question
Flint Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Flint offered a
Flint Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Flint offered a low downpayment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers. On January 1, 2020, a customer purchased a new $30,600 automobile, making a downpayment of $1,080. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Flint required a $369 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2021. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2023.
Prepare a note amortization schedule for the first year. (Round answers to 0 decimal places, e.g. 38,548.)
Date | Cash Paid | Interest Expense | Discount Amortized | Carrying Amount of Note | ||||
1/1/20 | $ | $ | $ | $ | ||||
4/1/20 | ||||||||
7/1/20 | ||||||||
10/1/20 | ||||||||
1/1/21 |
2. Indicate the amount the customer owes on the contract at the end of the first year. (Round answer to 0 decimal places, e.g. 38,548.)
3. Compute the amount of the new quarterly payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)
4. Prepare a note amortization schedule for these new payments for the next 2 years. (Round answers to 0 decimal places, e.g. 38,548.)
Date | Cash Paid | Interest Expense | Discount Amortized | Carrying Amount of Note | ||||
1/1/21 | $ | $ | $ | $ | ||||
4/1/21 | ||||||||
7/1/21 | ||||||||
10/1/21 | ||||||||
1/1/22 | ||||||||
4/1/22 | ||||||||
7/1/22 | ||||||||
10/1/22 | ||||||||
1/1/23 |
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