Blueprint Problem: Interest Calculations and Installment Notes Three items of information are needed to calcufate interest: the principal, the rate, and the time Of the three items, the time aspect is the most afmicult to understand. The rate of interest is almays stated on Selectbasis The formula for calculating interest is: Principal x Rate x Time Ir the time is a portion of a year, such as three months, the Time aspect of the formula must be stated three months would be stated as SelectIf interest is calculated for a full year, the Time element may be represented as 12/12 Also remember that if the end of a fiscal period occurs before interest is paid, an entry must be made to record accrued interest expense A period of and interest payable APPLY THE CONCEPTS: Calculating interest For each of the following lean terms, caloulate the amount of interest as directed in the question: A, Calculate the annual interest that will be pod on a $48,000, 6%' loan. Enter the interest rate as a percent (not requred, round a. answers to nearest cent. de mall, when 12 akulate the monthly interest that will be paid on a $63,000, 5.5% loan. Interest - 12-s Most notes payable require that the total amount of interest on the note be paid on the maturity date along with the principal of the note. Installment notes or loans, however, require regular payments to be paid. Each payment covers interest for that period plus the repayment of a portion of the principal amount. The amount of the peniodic payment repaid with each successive payment Select The formula for calculating interest for an installment loan is Principal at Beginning of Period x Rate x Time The only difference between this formula and the previous one is that the principal portion of this formula is the principal at the beginning of the period. This amount is different each period because the outstanding principal decreases with each payment Also remember that if the end of a fiscal period eccurs before interest is pald, an entry must be made to record accrued interest expense and interest payable. The amount of principal that is APPLY THE CONCEPTS: Instaliment loans On March 1, Mannenno Engneering signed a 30% mortgage (installment, note for $1 ss,000. The monthly payment of S700 is due on the ast day of each month. Complete the amortization table for the first three loan payments. When required, round your answers to nearest Payment Unpaid Balance at Beginning of Month Monthly Interest Expense Reduction in Principal of Debt Unpaid Balance at End of Period Date Mar. 31 Apr 30 May 31 Payment The journal entry for the Apelil 30 payment includes a Sefect to Mortpage Payable for s Setect to Cash for s For each account used in the journal entry, select the correct financial statement and the effect on the statement Account Title Mortgage Payable Balance SheetBalance Sheet Income Statement