Ultra Power Inc. engaged in the following transactions related to long term liabilities during 2011:a. On March 1 the company borrowed $50000 for a machine. The loan is to be repaid in equal annual payments of $6793 at the end of each of the next 10 years (beginning February 28 2012); the interest rate is 6%b. On October 1 the company borrowed $100000 from the local credit union at an interst rate of 8%. The loan is for seven yhears and Ultra power will make annual payments of $19207 on September 30 of each year.Requirements1. For each loan prepare an amortization schedule for the first four payments. Show the reduction in principal and the interest expense for each payment.2. What total interest explense related to these two loans would Ultra Power Inc. Show on its income statement for the year ended December 31 20113. How much interst payable would Ultra Power Inc show on its balance sheet at December 31 2011?
Sheet3
Sheet2
Sheet1
A
B
C
D
E
G
H
Name
Section
F
End of Problem
Principal
Term in years
Interest rate
Principal balance
Reduction in principal
Interest expense
Annual payment
Payment
Beginning bal.
Machine a.
Machine b.
Annual payment date February 28
Annual payment date September 30
Total interest shown on income statement
Total interest payable shown on balance sheet
Problem 7-63A
Part 1.
Part 2.
Part 3.
Ultra Power Inc
Amount
Formula 1
Formula 2
Formula 3
Formula 4
Reimers Financial Accounting 3e5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
Amount
13.00
2012.00
Amount
14.00
2013.00
Amount
15.00
2014.00
Amount
16.00
2015.00
Amount
17.00
18.00
19.00
20.00
21.00
22.00
23.00
Amount
24.00
2012.00
Amount
25.00
2013.00
Amount
26.00
2014.00
Amount
27.00
2015.00
Amount
28.00
29.00
30.00
31.00
$0.00
32.00
33.00
34.00
35.00
$0.00
36.00
Sheet3
Sheet2
Sheet1
A
B
C
D
E
G
H
Name
Section
F
End of Problem
Principal
Term in years
Interest rate
Principal balance
Reduction in principal
Interest expense
Annual payment
Payment
Beginning bal.
Machine a.
Machine b.
Annual payment date February 28
Annual payment date September 30
Total interest shown on income statement
Total interest payable shown on balance sheet
Problem 7-63A
Part 1.
Part 2.
Part 3.
Ultra Power Inc
Amount
Formula 1
Formula 2
Formula 3
Formula 4
Reimers Financial Accounting 3e5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
Amount
13.00
2012.00
Amount
14.00
2013.00
Amount
15.00
2014.00
Amount
16.00
2015.00
Amount
17.00
18.00
19.00
20.00
21.00
22.00
23.00
Amount
24.00
2012.00
Amount
25.00
2013.00
Amount
26.00
2014.00
Amount
27.00
2015.00
Amount
28.00
29.00
30.00
31.00
$0.00
32.00
33.00
34.00
35.00
$0.00
36.00
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