Question

On January 1, 2017, Eagle borrows \(100,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of \)29,523, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. Prepare an amortization table for this installment note like the one in Exhibit 10.12

Short answer

The payment of $29,523 includes the amount of both principal and interest.

Step-by-step solution

Meaning of Installment Notes

Installment notes refer to a business's liability in which a business entity must pay various installment payments to the lender.

Statement showing amortization table for loan

Payments
Period-Ending date	(A) Beginning Balance [Prior (E)]	(B) Bond Interest Expense (7% *(A))	(C) Notes Payable ((D) – (B))	(D) Credit cash (D) – (C)	(E) Ending Balances ((A) –(C))
2017	$100,000	$7,000	$22,523	$29,523	$77,477
2018	$77,477	$5,423	$24,100	$29,523	$53,377
2019	$53,377	$3,736	$25,787	$29,523	$27,590
2020	$27,590	$1,933*	$27,590	$29,523	-

* Adjusted for rounding