Good-Deal Auto developed a new sales gimmick to help sell its inventory of new automobiles. Because many
Question:
On January 1, 2019, a customer purchased a new €33,000 automobile, making a down payment of €1,000. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Good-Deal required a €400 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2020. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2022.
Instructions
a. Prepare a note amortization schedule for the first year.
b. Indicate the amount the customer owes on the contract at the end of the first year.
c. Compute the amount of the new quarterly payments.
d. Prepare a note amortization schedule for these new payments for the next 2 years.
e. What do you think of the new sales promotion used by Good-Deal?
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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