On January 1, 2023, Martineau Corp. issued a five-year, 8% installment note payable for $120,000 to finance
Question:
On January 1, 2023, Martineau Corp. issued a five-year, 8% installment note payable for $120,000 to finance upgrading its current equipment. The company’s year end is December 31. The repayment of $14,795 is done semiannually on January 1 and July
Required
a) Assuming an equal installment amount of $14,795, fill in the following table and determine the total interest expense incurred over the five-year term. A B C D Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance 14795 4800 9995 110005 14795 4400 10395 99610 14795 3984 10810 110421 14795 9979 14795 9979 14795 9979 14795 9979 14795 9979 14795 9979 14795 9979 14795 9979
b) Present the interest payable and notes payable on the partial balance sheet as at December 31, 2025, using the numbers calculated in part a). Assume that the accounts payable balance as at December 31, 2025, is $50,000 and that Martineau has no other liabilities.
c) Assuming Martineau has total assets of $455,000, calculate the debt-to-total-assets ratio and the debt-to-equity ratio for 2025.
Understanding Financial Accounting
ISBN: 978-1118849385
1st Canadian Edition
Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald