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On June 1, 2005, Yola Corp. loaned Dale $500,000 on a 12% note, payable in five annual installments of $100,000 beginning January 2, 2006. In connection with this loan, Dale was required to deposit $5,000 in a noninterest-bearing escrow account.
a. The amount held in escrow is to be returned to Dale after all principal and interest payments have been made. b. Interest on the note is payable on the first day of each month beginning July 1, 2005. c. Dale made timely payments through November 1, 2005. d. On January 2, 2006, Yola received payment of the first principal installment plus all interest due.
e. On December 31, 2005, Yola's interest receivable on the loan to Dale should be

Respuesta :

jepessoa

Answer:

$10,000

Explanation:

Dale should make monthly interest payments, each monthly payment = $500,000 x 1% = $5,000

The last time Dale paid interest was on November 1, 2005 (which covered October's interest). By December 31, Dale owes two months worth of interest since it must pay interest corresponding to November and December = $5,000 x 2 = $10,000

Therefore, Yola's interest receivable on December 31 = $10,000

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