On January 1, the Hudson Company borrowed $190,000 to purchase machinery and agreed to pay 8% interest for six years on an installment note. Each note payment is $41,100 and is due on the last day of the year. What is the carrying value of the loan at the end of the first year? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The carrying value at the end of the first year is calculated by subtracting the principal portion of the first installment payment from the initial loan amount. The interest for the first year is $190,000 * 8% = $15,200. The principal portion of the first payment is $41,100 - $15,200 = $25,900. Therefore, the carrying value is $190,000 - $25,900 = $164,100.

On January 1, the Hudson Company Borrowed $190,000 to Purchase