On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $65,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,625 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $31,200 cash per year.

Prepare an amortization schedule for the four-year period.

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year principal balance jan 1 cash payments dec 31 applied to interest applied to principal principal balance end of period
1

2
3
4
5

The bond amortization schedule is hereby attached,the balance of $1 left after 4 years is due to rounding error,since the loan is meant to have been paid in its entirety,hence zero balance should be left.

The repayment of $19,625 is usually divided into two the interest which is the 8% of the loan beginning while the balance after having deducted interest is used to reduce the principal.

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