10 Questions
What is the first step to calculate the adjusted balance after the first payment?
Calculate the interest on the loan amount from the date the promissory note was signed to the date of the first payment
What does the U.S. Rule state about partial payments on a promissory note?
Partial payments are applied to interest first, then reduce the loan balance
What is used to calculate the interest on the loan amount from the date the promissory note was signed to the date of the first payment?
Simple interest formula
What is the principal reduction amount for the first payment?
$19,800 - $693
What is the formula to calculate the interest from the first payment to the second payment?
Interest = Principal * Rate * Time
What is the adjusted balance after the first payment?
$60,093
How is the principal reduction amount of the second payment calculated?
Principal reduction amount = Payment - Interest
What is used as the time factor when calculating the interest from the first payment to the second payment?
45 days
How is the balance at maturity calculated?
Balance at maturity = Principal + Interest
What is the interest on the adjusted balance after the second payment until maturity?
$393.89
Test your knowledge of the U.S. Rule for making multiple payments on promissory notes. This rule specifies how partial payments are applied to interest and loan balance, and how to calculate the adjusted balance after the first payment.
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