Wolford Company borrowed $2,000,000 from U.S. Bank on January 1, 2016 in order to expand its mining capabilities. The five-year note required annual payments of $520,872 and carried an annual interest rate of 9.5%. What is the balance in the notes payable account at December 31, 2017 after the annual payment?

Question

Quizplus · Accepted Answer

The correct answer is B. The balance in the notes payable account at December 31, 2017 after the annual payment is $1,306,824.The annual payment is $520,872. The interest expense for the year is $190,000 ($2,000,000 x 9.5%). The principal payment for the year is $330,872 ($520,872 - $190,000). The balance in the notes payable account at December 31, 2017 is $1,669,128 ($2,000,000 - $330,872).

Wolford Company Borrowed $2,000,000 from U