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:
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.
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
Step by Step Answer:
a 1 Amount is given Payment Interest Principal 5250 7020 1227...View the full answer
Understanding Financial Accounting
ISBN: 9781119406921
2nd Canadian Edition
Authors: Christopher D. Burnley
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A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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