Mortgage Extra Credit Problem 15 points Due: Last day of class On December 31, 2
ID: 2608272 • Letter: M
Question
Mortgage Extra Credit Problem 15 points Due: Last day of class On December 31, 2016, ABC Corporation purchased a building costing $300,000, signing a 10%, 5-year mortgage note payable on December 31, 2016, Five ANNUAL payments will be made each year to pay back the mortgage beginning on December 31,2017 REQUIRED A. B. what is the annual installment payment required at a 10% rate?(3 pts) Give the general journal entry to record the purchase of the building (2 pts) C. Prepare an effective interest amortization table for the five years (5 pts) D. Give the general journal entries to record each of the five mortgage payments beginning on December 31, 2017Explanation / Answer
Answer
A.
Number of payment=5
Interest rate =10%
loan amount=$300000
annual installment payment =300000/3.7908=79139.25
(Factor @ 10% for 5 Years (1/1.10, 5times))
B.
General Journal Entries
Date
Particular
Debit
Credit
31.12.2016
Building A/c
To Mortgage Note Payable
$ 300000.00
$ 300000.00
C.
Mortgage Loan payment schedule(effective interest amortization table)
Year
Opening Outstanding
Installment
Principal
Interest
Balance
2011
300000.00
79139.25
49139.25
30000.00
250860.75
2012
250860.75
79139.25
54053.18
25086.08
196807.58
2013
196807.58
79139.25
59458.49
19680.76
137349.08
2014
137349.08
79139.25
65404.34
13734.91
71944.74
2015
71944.74
79139.21
71944.74
7194.47
0.00
D.
General Journal Entries
Date
Particular
Debit
Credit
31.12.2017
Interest on Mortgage Note Payable
To Mortgage Note Payable
$ 30000.00
$ 30000.00
31.12.2017
Mortgage Note Payable
To Cash/Bank
$ 79139.25
$ 79139.25
31.12.2018
Interest on Mortgage Note Payable
To Mortgage Note Payable
$ 25086.075
$ 25086.075
31.12.2018
Mortgage Note Payable
To Cash/Bank
$ 79139.25
$ 79139.25
31.12.2019
Interest on Mortgage Note Payable
To Mortgage Note Payable
$ 19680.76
$ 19680.76
31.12.2019
Mortgage Note Payable
To Cash/Bank
$ 79139.25
$ 79139.25
31.12.2020
Interest on Mortgage Note Payable
To Mortgage Note Payable
$ 13734.91
$ 13734.91
31.12.2020
Mortgage Note Payable
To Cash/Bank
$ 79139.25
$ 79139.25
31.12.2021
Interest on Mortgage Note Payable
To Mortgage Note Payable
$ 7194.47
$ 7194.47
31.12.2021
Mortgage Note Payable
To Cash/Bank
$ 79139.21
$ 79139.21
Date
Particular
Debit
Credit
31.12.2016
Building A/c
To Mortgage Note Payable
$ 300000.00
$ 300000.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.