Question

On January 1, 2018 Gundy Enterprises purchased an office for $184,000, paying $44,000 down and borrowing...

On January 1, 2018 Gundy Enterprises purchased an office for $184,000, paying $44,000 down and borrowing the remaining 140,000, signing a 7%, 10 year mortgage. Installment payments of $1,625.52 are due at the end of each month, with the first payment due on January 31,2018.

1. Record the purchase of the building on january 1, 2018
2. Complete the first three rows of an amortization schedule.
3(a). Record the first monthly mortgage payment on January 31,2018.
3(b). How much of the first payment goes to interest expense and how much goes to reducing the carrying value of the loan.

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Answer #1
01-Jan-18 Building 184000
               Cash 44000
               Mortgage loan 140000
Amortization Bonds
Date Interest payment @ 7% Installment Bond Payable
01-01-2018 140000
31-01-2018 816.67 1625.52 808.85 139191.15
28-02-2018 811.95 1625.52 813.57 138377.58
31-01-2018 Interest expense 816.67
Mortgage loan 808.85
                 Cash 1625.52

Interest part = 816.67

Reducing the carrying value = 808.85

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