Problem 14-3 Sarasota Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Sarasota 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, 2017, a customer purchased a new $37,800 automobile, making a downpayment of $1,560. The customer signed a note indicating that the annual rate of interest would be 12% and that quarterly payments would be made over 3 years. For the first year, Sarasota required a $453 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2018. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2020.

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

1/1/17

4/1/17

7/1/17

10/1/17

1/1/18

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.)

The customer owes on the contract at the end of the first year $

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.)

The new quarterly payments $

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

1/1/18

4/1/18

7/1/18

10/1/18

1/1/19

4/1/19

7/1/19

10/1/19

1/1/20