A company takes out a four-year, $760.000 mortgage on May 1. The interest ate on

Question

A company takes out a four-year, $760.000 mortgage on May 1. The interest ate on the loan is 8% per year, and blended payments o S 18.554 including both interest and principal are to be made at the end of each month. The following is an extract rom the loan amortization table the bank provided the company Beginning Loan Ending Loan BalancePayment Interest PrincipalBalance Payment1 Payment 2 Payment 3 Payment 4 18,554 18,554 760,000 746,513 732.936 18. 719,269 18,554 4,795 13,759 5,067 13,487 4,977 13,577 554 4,886 13,668 746,513 732,936 719.268 705,509 Prepare the journal entries to record the inception of the loan and the first two monthly payments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit May 1 May 31 Jum. 30

Explanation / Answer

Inception of the loan May-01 Cash 760000       Mortage payable 760000 May-31 Interest Expenses 5067 Mortage Payable 13484            Cash 18554 Jun-30 Interest Expenses 4997 Mortage Payable 13577            Cash 18554

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