Jay Mills started a business by issuing a $60,000 face value note to State National Bank on January 1, 2013. The note had a 6 percent annual rate of interest and a 10 year term. Payments of $8,152 are to be made each December 31 for 10 years.
Required:
a. What portion of the December 31, 2013, payment is applied to
(1) Interest expense?
(2) Principal?
b. What is the principal balance on January 1, 2014?
c. What portion of the December 31, 2014, payment is applied to
(1) Interest expense?
(2) Principal?