A company takes out a four-year, $740,000 mortgage on May 1. The interest rate o

Question

A company takes out a four-year, $740,000 mortgage on May 1. The interest rate on the loan is 5% per year, and blended payments of $17,042 (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: Beginning Loan Ending Loan Payment Interest Principal 13,959 14,017 14,075 14,134 Balance Balance Payment 1 Payment 2 Payment 3 Payment 4 740,000 726,041 712,024 697,949 17,042 17,042 17,042 17,042 3,083 3,025 2,967 2,908 726,041 712,024 697,949 683,815 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 Jun. 30

Explanation / Answer

May-01 Cash 740000      Mortgage Payable 740000 May-31 Interest expense 3083 Mortgage Payable 13959       Cash 17042 Jun-30 Interest expense 3025 Mortgage Payable 14017       Cash 17042

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.