Question

On November 1, 2016, EZ Products borrowed $64,000 on a 5%, five-year note with annual installment payments of $12,800 plus interest due on November 1 of each succeeding year. On November 1, 2018, what is the balance of the long-term notes payable account

Answer 1

The correct answer is $38,400.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Amount borrowed = $64,000

Rate = 5%

Time period = 5 years

So, we can calculate balance of the long term notes payable by using following formula:

Balance of the​ Long-Term Notes Payable​ = $64,000 - ( $12,800 × 2 years)

= $38,400