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On January 1, 2017, Texas Inc. obtained a $50,000, four -year, 7% installment note from Arkansas...

On January 1, 2017, Texas Inc. obtained a $50,000, four -year, 7% installment note from Arkansas Bank. The note requires four annual payments of $14,761, beginning on December 31, 201 7. The portion of the Notes Payable that would be included in the current liability section of Texas’s balance sheet at December 31, 2017 , after the first payment is made would be :

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Answer #1

The Bank Note amount is $50,000 and the rate of installment for the four year note is 7%.

Annual payments to be made is $14,761 for four years.

Initial installment at the end of first year = $50,000 * 7% = $3,500.

Hence, at the end of first year the total amount of bank note = $50,000 + $3,500 = $53,500.

Also, at the end of first year, the first payment made = $14,761.

Therefore, the amount of notes payable to be shown in the current liability section of Texas's balance sheet = $53,500 - $14,761 = $38,379.

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