Asked by Dameion Goodwin on May 21, 2024
Verified
An installment note payable for a principal amount of $94,000 at 6% interest requires Lawson Company to repay the principal and interest in equal annual payments of $22,315 beginning December 31, of the first year, for each of the next five years. After the final payment, the carrying amount on the note will be
A) $1,263
B) $21,053
C) $22,315
D) $0
Principal Amount
The original sum of money borrowed in a loan or put into an investment, excluding interest or profit.
Installment Note
A debt instrument that requires regular payments, or installments, of principal and interest over a set period of time until the full amount, including interest, is paid.
- Determine the carrying amount of bonds and installment notes over time.
Verified Answer
MB
michael brianMay 26, 2024
Final Answer :
D
Explanation :
The carrying amount of the note will be $0 after the final payment because the terms of the note require Lawson Company to repay the principal and interest in full over the five-year period through equal annual payments.
Learning Objectives
- Determine the carrying amount of bonds and installment notes over time.
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