Amortization schedule for note where stated interest rate differs from historical market rate of interest. Hager Company acquires a computer from Volusia Computer Company. The cash price (fair value) of the computer is $37,938 Hager Company gives a three-year, interest-bearing note with a maturity value of $40,000. The note requires annual payments of 6% of face value, or $2,400 per year, payable at the end of each year. The interest rate implicit in the note is 8% per year.

a. Prepare an amortization schedule for the note similar to Exhibit 10.2

b. Prepare journal entries for Hager Company over the life of the note. Ignore entries for depreciation expense on thecomputer.

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Amortization Schedule for $800,000 Loan, Repaid in 10 Semiannual Installments of $93,784.41. Interest Rate Is 6% Compounded Semiannually (3% compounded each six months) EXHIBIT 10.2 Portion of Balance at Interest Balance at End of Period Expense for Period Beginning of Period (2) Cash Payment Reducing Principal (5) Period Payment (4) (6) (1) (3) (569,784.41) $730,215.59 $800,000.00 $24,000.00 $93,784.41 (571,877.94) ($74,034.28) $730,215.59 $21,906.47 $93,784.41 S658,337.65 $658,337.65 $19,750.13 $93,784.41 $584,303.37 4. $584,303.37 $17,529.10 (S76,255.31) ($78,542.97) $508,048.06 $93,784.41 $508,048.06 $15,241.44 $93,784.41 $429,505.09 $429,505.09 $12,885.15 ($80,899.26) ($83,326.24) $348,605.83 $93,784.41 $348,605.83 $10,458.17 $93,784.41 $265,279.60 $ 7,958.39 $ 5,383.61 $ 2,731.64 $265,279.60 $93,784.41 ($85,826.02) (S88,400.80) $179,453.58 $ 91,052.77 $93,784.41 $179,453.58 $ 91,052.77 $93,784.41 (591,052.77) 10 Column (2) – Column (6) from previous period. Column (3) - .03 x Column (2), except for period 10, where it is the amount such that Column (3) - Column (4) – Column (5). Column (4) is given. Column (5) - Column (4) - Column (3). Column (6) - Column (2) - Column (5).