An installment note payable for a principal amount of $94,000 at 6% interest requires Lawson Company to repay the principal and interest in equal annual payments of $22,315 beginning December 31, of the first year, for each of the next five years. After the final payment, the carrying amount on the note will be
A) $1,263
B) $21,053
C) $22,315
D) $0

Question

Quizplus · Accepted Answer

The carrying amount of the note will be $0 after the final payment because the terms of the note require Lawson Company to repay the principal and interest in full over the five-year period through equal annual payments.

An Installment Note Payable for a Principal Amount of $94,000