Glen Pool Club, Inc., has a $143,000 mortgage liability. The mortgage is payable

Question

Glen Pool Club, Inc., has a $143,000 mortgage liability. The mortgage is payable in monthly installments of $1,740, which include interest computed at an annual rate of 12 percent (1 percent monthly).

Prepare a partial amortization table showing (1) the original balance of this loan, and (2) the allocation of the first two monthly payments between interest expense and the reduction in the mortgage’s unpaid balance. (Round your answers to the nearest dollar amount. Enter all amounts as positive numbers.)

Glen Pool Club, Inc., has a $143,000 mortgage liability. The mortgage is payable in monthly installments of $1,740, which include interest computed at an annual rate of 12 percent (1 percent monthly).

Explanation / Answer

Monthly Monthly interest Reduction unpaid bal interest payment expense in principal period original bal 143,000 1 1,740 1,430 310 142,690 2 1,740 1,427 313 142,377 interest expense 143000*1%= 1430 interest expense 142,690*1%= 1427

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