Prepare a note amortization schedule for the first year

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Problem 14-3 Good-Deal Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Good-Deal offered a low downpayment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.

On January 1, 2014, a customer purchased a new $33,600 automobile, making a downpayment of $1,200. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Good-Deal required a $405 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2015. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2017.

(a) Prepare a note amortization schedule for the first year. (Round answers to 0 decimal places, e.g. 38,548.)

(b) Indicate the amount the customer owes on the contract at the end of the first year. (Round answer to 0 decimal places, e.g. 38,548.)

The customer owes on the contract at the end of the first year

(c) Compute the amount of the new quarterly payments. (Round answer to 0 decimal places, e.g. 38,548.)

(d) Prepare a note amortization schedule for these new payments for the next 2 years. (Round answers to 0 decimal places, e.g. 38,548.)

Reference no: EM131774998

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