Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Novacore Manufacturing Inc. intends to finance the acquisition of new manufacturing equipment that costs $ 150,000 by issuing a 5- year, 3.5% note payable. The

image text in transcribed

image text in transcribed

Novacore Manufacturing Inc. intends to finance the acquisition of new manufacturing equipment that costs $ 150,000 by issuing a 5- year, 3.5% note payable. The note would be issued on January 1, 2021. Novacore's year end is December and the note would require annual payments on December 31. The finance company has given Novacore the choice of making blended payments of $ 33,222, or making fixed payments of $ 30,000 plus interest. Instructions a) Assuming the blended payment option is selected; prepare the amortization table for the first two years of the note payable. Record the issue of the note and the December 31, 2021 payment under this alternative. Cash payment Interest expense Reduction of principal Principal balance Jan. 1, 2021 $ $ Dec. 31, 2021 $ Dec. 31, 2022 Jan 1, 2021 Dec 31, 2021 Dec 31, 2021 . b) Assuming the fixed principal payment option is selected prepare the amortization table for the first two years of the note payable. Record the December 31, 2021 payment under this alternative. Cash payment Interest expense Reduction of principal Principal balance Jan 1, 2021 Dec 31, 2021 $ $ Dec 31, 2022 Dec 31, 2021 >

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting An International Perspective

Authors: Arne Kinserdal

2nd Edition

0273631543, 978-0273631545

More Books

Students also viewed these Accounting questions

Question

Explain the pattern of trade union membership and union structure

Answered: 1 week ago