Question: Larry the Locksmith needed some long-term financing and arranged for a $200,000, 20-year mortgage loan on December 31, 2009. The interest rate is 7% per

Larry the Locksmith needed some long-term financing and arranged for a $200,000, 20-year mortgage loan on December 31, 2009. The interest rate is 7% per year, with $20,000 (rounded) payments made at the end of each year, starting December 31, 2010.

1. What is the amount of interest expense related to this loan for 2010?

2. What amount of liability should appear on the December 31, 2010, balance sheet?

3. What is the amount of interest expense related to this loan for 2011?

4. What amount of liability should appear on the December 31, 2011, balance sheet?

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