Business
Understanding Financial Accounting
A company takes out an eight-year, $900,000 mortgage on September

A company takes out an eight-year, $900,000 mortgage on September 1. The interest rate on the mortgage

Question:

A company takes out an eight-year, $900,000 mortgage on September 1. The interest rate on the mortgage is 7.0% per year, and blended payments of $12,270 (including both interest and principal) are to be made at the end of each month. The following is an extract from the mortgage amortization table:

Beginning Ending Mortgage Mortgage Balance Payment 900,000 Interest Principal 5,250 (3) 5,168 5,126 Balance (2) 885,919

Required

a. Determine the missing amounts.

b. Prepare the journal entries to record the inception of the mortgage and the first two monthly payments. Ignore year end accruals of interest.

Transcribed Image Text:

Beginning Ending Mortgage Mortgage Balance Payment 900,000 Interest Principal 5,250 (3) 5,168 5,126 Balance (2) 885,919 (6) 871,673 Payment 1 Payment 2 Payment 3 Payment 4 7,020 (4) 7,102 (1) 12,270 12,270 12,270 892,980 (5) 878,817 7,144

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a 1 Amount is given Payment Interest Principal 5250 7020 1227...View the full answer

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Understanding Financial Accounting

ISBN: 9781119406921

2nd Canadian Edition

Authors: Christopher D. Burnley

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Question Posted: Jul 26, 2019 06:22 AM

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