Greely Corporation is a publicly-traded corporation with acalendar year end. For purposes of classifying current assets andcurrent liabilities, it uses a one year period.
1. On January 1, 2016, Greeley Corporation borrowed $1,500,000cash from First Source Bank by signing a three-year note bearing 4%interest. The bank requires equal annual payments on January 1st ofeach year. The first payment was due on January 1, 2017.
2. On March 15, 2016, Greeley Corporation borrowed $750,000 cashfrom JP Morgan Chase Bank by signing a four-year note bearing 3.75%interest. The bank requires equal monthly payments on the 15th ofeach month. The first payment was due on April 15, 2016.
3. On June 1, 2016, WTM Corporation borrowed $500,000 cash fromFifth Third Bank by signing a two-year note bearing 3.25% interest.The bank requires bi-monthly payments on the 1st and 15th of eachmonth. The first payment is due on June 15, 2016.
4. On October 1, 2016, WTM Corporation issued an eighteen-monthzero-interest bearing note for $200,000 note to Lake City Bank andreceived $189,223. WTM amortizes the discount at the end of eachmonth using the effective interest rate method.
Required:
1. Compute the required payments for the notes to First Source,JP Morgan Chase, and Fifth Third Bank using Excelâs PMTfunction.
2. Compute the interest rate on the note to Lake City Bank usingExcelâs RATE function.
3. Construct amortization tables for each of the four notes forthe entire term of the loans. Provide labels for the dates of thepayment, the payment, interest expense, principal reduction, andbook value of the debt.
4. Complete a partial balance sheet for Greeley Corporation forDecember 31, 2016 and December 31, 2017.
7. Prepare the âCash Flow from Financing Activitiesâ section ofthe Statement of Cash Flows for Greeley Corporation for 2016 and2017, assuming that the only debt issued during the year was theborrowing from First Source Bank. â
