A company takes out a six-year, $500,000 long-term loan on March 1. The interest rate on the loan is 4% per year, and blended payments of $7,823 (including both interest and principal) are to be made at the end of each month. The following is an extract from the loan amortization table the bank provided the company:

Required

a. Determine the missing amounts.

b. Prepare the journal entries to record the inception of the loan and the first two monthly payments.

c. The last loan payment (payment 72), includes $7,797 in principal repayment. Prepare the journal entries to record the last payment.

Transcribed Image Text:

Beginning Loan Balance 500,000 493,844 487,687 (5) Ending Loan Interest Principal Payment Balance 493,844 487,667 6,156 (3) 6,197 Payment 1 Payment 2 Payment 3 Payment 4 (1) 7,823 7,823 7,823 1,667 (2) 1,626 (6) (4) 475,252 6,218