Farris Company borrowed $800,000 from BankTwo on January 1, 2020, in order to expand its mining capabilities.The 5-year note required annual payments of $208,349 and carried an annual interest rate of 8.5%.What is the balance in the company's notes payable account at January 1, 2022?

Question

Quizplus · Accepted Answer

The balance in the notes payable account at January 1, 2022, is $507,372. This is because the company has made two annual payments of $208,349 each, which reduces the principal balance by $416,698. The remaining principal balance is $800,000 - $416,698 = $507,372.

Farris Company Borrowed $800,000 from BankTwo on January 1, 2020