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Understanding Financial Accounting
A company takes out a seven-year, $750,000 mortgage on December

A company takes out a seven-year, $750,000 mortgage on December 1. The interest rate on the mortgage

Question:

A company takes out a seven-year, $750,000 mortgage on December 1. The interest rate on the mortgage is 6.0% per year, and blended payments of $10,956 (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:

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:

Payment 1 Payment 2 Payment 3 Payment 4 Beginning Mortgage Balance 750,000 (3) 735,552 (7) Payment (1) 10,956 10,956 10,956 Interest 3,750 3,714 (5) 3,641 Principal 7,206 (4) 7,278 (8) Ending Mortgage Balance (2) 735,552 (6) 720,959

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a b Inception of the mortgage 1 Amount is given 10956 Payment Interest Principal 3750 ...View the full answer

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Understanding Financial Accounting

ISBN: 9781119715474

3rd Canadian Edition

Authors: Christopher D. Burnley

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Question Posted: Jan 31, 2023 04:45 AM

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