Question

On January 1, 2016, Brubeck Company purchased equipment and signed a six-year mortgage note for $160,000 at 15%. The note will be paid in equal annual installments of $42, 278, beginning January 1, 2017. Calculate the balance of Mortgage Payable alter the payment of the first installment. (Round your answer to the nearest whole number.)

a. $24,000
b. $117, 722
c. $141, 722
d. $120, 702

Answer 1

Correct option is C.

$141,722

Step-by-step explanation:

Interest for First Year = $ 160000 x 15% = $ 24000

Instalment amount = $ 42278

Principal amount paid in instalment = $ 42278 – 24000 = $ 18,278

Balance of Mortgage payable after first instalment

= $ 160000 – $18278

= $ 141,722