Keith Pryor has just approached a venture capitalist for financing for his sailing school. The venture capitalist is willing to loan Keith $90,000 at a high risk annual interest rate of 24%. The loan is payable over 3 years in monthly installments of $3,531.
Each payment includes principal and interest, calculated using the effective interest method for amortizing debt. Keith receives the loan on May 1, 2010, which is the first day of his fiscal year. Keith makes the first payment on May 31, 2010.
Instructions
(a) Prepare an amortization schedule for the period from May 1, 2010, to August 31, 2010. Round all calculations to the nearest dollar.
(b) Prepare all journal entries for Keith Pryor for the period beginning May 1, 2010, and ending July 31, 2010. Round all calculations to the nearest dollar.