question a company takes out a four year 860 000 mortgage on may 1 theinterest rate 4281742
Question
A company takes out a four-year, $860,000 mortgage on May 1. Theinterest rate on the loan is 5% per year, and blended payments of$19,805 (including both interest and principal) are to be made atthe end of each month. The following is an extract from the loanamortization table the bank provided the company:
|
|
|
Beginning Loan Balance |
|
Payment |
|
Interest |
|
Principal |
|
Ending Loan Balance |
|
Payment 1 |
|
860,000 |
|
19,805 |
|
3,583 |
|
16,222 |
|
843,778 |
|
Payment 2 |
|
843,778 |
|
19,805 |
|
3,516 |
|
16,289 |
|
827,489 |
|
Payment 3 |
|
827,489 |
|
19,805 |
|
3,448 |
|
16,357 |
|
811,132 |
|
Payment 4 |
|
811,132 |
|
19,805 |
|
3,380 |
|
16,425 |
|
794,707 |
Prepare the journal entries to record the inception of the loan andthe first two monthly payments.