SIthembile traders has been in business for two years since 1 January 20.1. You are presented with their final trial balance at 31 December 20.2.

Mortgage bond 75 000

Interest on mortgage bond 10 575

The mortgage bond was registered on 1 January 20.1 when Sithembile traders purchased property, paying 25% deposit and raising a mortgage bond for the remaining 75% (90 000) of the value of the property.

Repayments are made off the capital amount of the bond at a rate of 5 000 every six months, commencing 30 June 20.1. Make provision for the full year's interest on the bond. The bond rate was increased by 2% to 20% p.a. on 30 September 20.2

Please help calculate interest on mortgage bond. Kindly provide explanation with full calculations. Thanking you in advance.