Reference no: EM133172657

Question - Pretty Feet Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because of many new car buyers need financing, Pretty Feet offered a low down payment and low car payments for the first year of purchase. It believes that this promotion will bring in some new buyers.

On January 1, 2017, a customer purchased a new P25,000 automobile, making a down payment of P1,000. The customer signed a note indicating that the annual interest rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Pretty Feet required a P300 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2018. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2019.

Required -

(a) Prepare note amortization schedule for the first year.

(b) Indicate the amount the customer owes on the contract at the end of the first year.

(c) Compute the amount of the new quarterly payments.