On January 1,Zero Company obtained a $52,000,4-year,6.5% installment note from Regional Bank.The note requires annual payments consisting of principal and interest of $15,179,beginning on December 31 of the current year.The December 31,Year 1 carrying amount in the allocation of periodic payments table for this installment note will be equal to:
A) $27,635
B) $40,201
C) $36,821
D) $39,000

Question

​On January 1,Zero Company obtained a $52,000,4-year,6.5% installment note from Regional Bank.The note requires annual payments consisting of principal and interest of $15,179,beginning on December 31 of the current year.The December 31,Year 1 carrying amount in the allocation of periodic payments table for this installment note will be equal to:
A) ​$27,635
B) ​$40,201
C) ​$36,821
D) ​$39,000

Quizplus · Accepted Answer

The carrying amount after the first payment is the initial principal minus the principal portion of the first payment. The interest for the first year is $52,000 * 6.5% = $3,380. The principal portion of the first payment is $15,179 - $3,380 = $11,799. Therefore, the carrying amount is $52,000 - $11,799 = $40,201.

​On January 1,Zero Company Obtained a $52,000,4-Year,6

On January 1,Zero Company Obtained a $52,000,4-Year,6