A company takes out a four-year, $700,000 mortgage on May 1. The interest rate on...
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A company takes out a four-year, $700,000 mortgage on May 1. The interest rate on the loan is 7% per year, and blended payments of $16,762 (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 12,679 12,753 12,827 12,902 Balance Balance Payment1 Payment 2 Payment3 Payment 4 700,000 687,321 674,568 661,741 16,762 16,762 16,762 16,762 4,083 4,009 3,935 3,860 687,321 674,568 661,741 648,839 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 un. 30
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