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A company takes out a five-year, $2.9-million mortgage on October 1. The interest rate on the loan is 6% per year, and blended payments of $56,065 (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 with: Payment 1 Payment 2 Payment 3 Payment 4 (b) Beginning Loan Balance $2,900,000 2,858,435 2,816,662 2,774,680 Payment Interest Principal $56,065 $14,500 $41,565 56,065 56,065 56,065 14,292 14,083 13,873 41,773 41,982 42,192 Ending Loan Balance $2,858,435 2,816,662 2,774,680 2,732,488 Prepare the journal entries to record the inception of the loan and the first two monthly payments. (Credit account titles are

A company takes out a five-year, $2.9-million mortgage on October 1. The interest rate on the loan is 6% per year, and blended payments of $56,065 (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 with: Payment 1 Payment 2 Payment 3 Payment 4 (b) Beginning Loan Balance $2,900,000 2,858,435 2,816,662 2,774,680 Payment Interest Principal $56,065 $14,500 $41,565 56,065 56,065 56,065 14,292 14,083 13,873 41,773 41,982 42,192 Ending Loan Balance $2,858,435 2,816,662 2,774,680 2,732,488 Prepare the journal entries to record the inception of the loan and the first two monthly payments. (Credit account titles are

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company takes out a five-year, $2.9-million mortgage on October 1. The interest rate on the loan is 6% per year, and blended payments of $56,065 (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 with: Payment 1 Payment 2 Payment 3 Payment 4 (b) Beginning Loan Balance $2,900,000 2,858,435 2,816,662 2,774,680 Payment Interest Principal $56,065 $14,500 $41,565 56,065 56,065 56,065 14,292 14,083 13,873 41,773 41,982 42,192 Ending Loan Balance $2,858,435 2,816,662 2,774,680 2,732,488 Prepare the journal entries to record the inception of the loan and the first two monthly payments. (Credit account titles are automatically indented when amount is entered. Do not indent manually. no entry is uired, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.)
Transcribed Image Text:A company takes out a five-year, $2.9-million mortgage on October 1. The interest rate on the loan is 6% per year, and blended payments of $56,065 (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 with: Payment 1 Payment 2 Payment 3 Payment 4 (b) Beginning Loan Balance $2,900,000 2,858,435 2,816,662 2,774,680 Payment Interest Principal $56,065 $14,500 $41,565 56,065 56,065 56,065 14,292 14,083 13,873 41,773 41,982 42,192 Ending Loan Balance $2,858,435 2,816,662 2,774,680 2,732,488 Prepare the journal entries to record the inception of the loan and the first two monthly payments. (Credit account titles are automatically indented when amount is entered. Do not indent manually. no entry is uired, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.)
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