Answered: Interest for 1 Month at 1% on Unpaid…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter4: Income Measurement And Accrual Accounting

Section: Chapter Questions

Problem 4.20E: Interest Receivable On June 1, 2016, MicroTel Enterprises lends $60,000 to MaxiDriver Inc. The loan...

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Question

Mortgage Payable
E1B. Kavra Corporation purchased a building by signing a $150,000 long-term mortgage
with monthly payments of $2,000. The mortgage carries an interest rate of 12 percent.
1. Prepare a monthly payment schedule showing the monthly payment, the interest for
the month, the reduction in debt, and the unpaid balance for the first three months.
(Round to the nearest dollar.)
2. Prepare the journal entries to record the purchase and the first two monthly
payments.

Interest for 1
Month at 1% on
Unpaid Balance
Monthly
Payment
Reduction
Month
Unpaid Balance
in Debt
at End of Period
$150,000
2. Entries prepared in journal form
Month 0
Purchased building by signing a
mortgage
Month 1
Made first monthly payment on
mortgage
Month 2
Made second monthly payment on
mortgage
O12N 3

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