On January 1, Year 1, Kramer Co. borrowed cash from First City Bank by issuing a $90,000
Question:
On January 1, Year 1, Kramer Co. borrowed cash from First City Bank by issuing a $90,000 face-value, three-year term note that had a 7 percent annual interest rate. The note is to be repaid by making annual payments of $34,295 that include both interest and principal on December 31. Kramer invested the proceeds from the loan in land that generated lease revenues of $45,000 cash per year.
Required
a. Prepare an amortization schedule for the three-year period.
b. Organize the information in accounts under an accounting equation.
c. Prepare an income statement, balance sheet, and statement of cash flows for each of the three years.
d. Does cash outflow from operating activities remain constant or change each year? Explain.
Step by Step Answer:
a Kramer Co Amortization Schedule 90000 3Yr Term Note 7 Interest Rate Year Prin Bal on Jan 1 Cash Pay Dec 31 Applied to Interest Applied to Principal ...View the full answer
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
Related Video
An amortization schedule (sometimes called an amortization table) is a table detailing each periodic payment on an amortizing loan. Each calculation done by the calculator will also come with an annual and monthly amortization schedule above. Each repayment for an amortized loan will contain both an interest payment and payment towards the principal balance, which varies for each pay period. An amortization schedule helps indicate the specific amount that will be paid towards each, along with the interest and principal paid to date, and the remaining principal balance after each pay period
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