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On January​ 1, 2018, Benbrook 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, 2019. Calculate the balance of Mortgage Payable after the payment of the first installment.​ (Round your answer to the nearest whole​ number.)

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tutorAnne

Answer:Balance of the mortgage payable after first installment =  $142,000

Explanation:

Interest Expense of First Installment = Principal x Interest Rate

               = $160,000 X 15% = $24,000

Principle amount of the installment=Total annual  installment−Interest of the first  installment

                =$42,278 −$24,000  =$18,278

Balance of the mortgage payable=   Opening mortgage payable balance

−Principle amount of the first installment

​=$160,000 - $18,278

=$141,722  rounded up to $142,000

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