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On July 1, 20X3, Kern sold a parcel of land to Barr Co. for $400,000 under an installment sale contract. Barr made a $120,000 cash down payment on July 1, 20X3, and signed a 4-year 10% note for the $280,000 balance. The equal annual payments of principal and interest on the note will be $88,332 payable on July 1 of each year beginning in 20X4. What is interest revenue for 20X3?
My question is, if there are 4 equal annual payments of principal and interest of 88,332 for the 280,000 note, wouldn’t each annual payment be 70,000 principal and 28,000 interest for a total of 98,000?
But since it was 88,332, I didn’t know whether I should subtract 70,000 principal from it and conclude 18,332 as interest or subtract 28,000 interest from it and conclude that the principal paid was 60,332.
FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016
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