Complete part a, b and c. PROBLEM 10.4A Preparation and Use of an Amortization Table L LO10-4On September 1, 2021, Speedy Lube signed a 30-year, $1,080,000 mortgage note payable to Jonstown Bank and Trust in conjunction withthe purchase of a building and land. The mortgage note calls for interest at an annual rate of 12 percent (1 percent per month). The note isfully amortizing over a period of 360 months.The bank sent Speedy Lube an amortization table showing the allocation of monthly payments between interest and principal over the life ofthe loan. A small part of this amortization table is illustrated as follows. (For convenience, amounts have been rounded to the nearestdollar.)AMORTIZATION TABLE (12%, 30-YEAR MORTGAGE NOTE PAYABLE FOR $1,080,000; PAYABLE IN 360 MONTHLY INSTALLMEInterest PeriodPayment DateMonthly PaymentInterest ExpensePrincipal ReductionUnSept. 1, 2021Oct. 1Nov. 1Issue date1$11,110$10,800$31011,11010,797313Instructionsa. Explain whether the amounts of interest expense and the reductions in the unpaid principal are likely to change in any predictable patternfrom month to month.b. Prepare journal entries to record the first two monthly payments on this mortgage.c. Complete this amortization table for two more monthly installments-those due on December 1, 2021, and January 1, 2022. (Roundamounts to the nearest dollar.)d. Will any amounts relating to this 30-year mortgage be classified as current liabilities in Speedy Lube's December 31, 2021, balance sheet?Explain, but you need not compute any additional dollar amounts. PROBLEM 10.4A Preparation and Use of an Amortization Table e LO10-4On September 1, 2021, Speedy Lube signed a 30-year, $1,080,000 mortgage note payable to Jonstown Bank and Trust in conjunction withthe purchase of a building and land. The mortgage note calls for interest at an annual rate of 12 percent (1 percent per month). The note isfully amortizing over a period of 360 months.The bank sent Speedy Lube an amortization table showing the allocation of monthly payments between interest and principal over the life ofthe loan. A small part of this amortization table is illustrated as follows. (For convenience, amounts have been rounded to the nearestdollar.)N TABLE (12%, 30-YEAR MORTGAGE NOTE PAYABLE FOR $1,080,000; PAYABLE IN 360 MONTHLY INSTALLMENTS OF $11,110)dPayment DateMonthly PaymentInterest ExpensePrincipal ReductionUnpaid BalanceSept. 1, 2021Oct. 1$1,080,000$11,110$10,800$3101,079,690Nov. 111,11010,7973131,079,377Instructionsa. Explain whether the amounts of interest expense and the reductions in the unpaid principal are likely to change in any predictable patternfrom month to month.b. Prepare journal entries to record the first two monthly payments on this mortgage.c. Complete this amortization table for two more monthly installments-those due on December 1, 2021, and January 1, 2022. (Roundamounts to the nearest dollar.)d. Will any amounts relating to this 30-year mortgage be classified as current liabilities in Speedy Lube's December 31, 2021, balance sheet?Explain, but you need not compute any additional dollar amounts.

The loan amortization table refers to the table used to calculate the principal portion and interest…

On September 1, 2021, Speedy Lube signed a 30-year, $1,080,000 mortgage note payable to Jonstown Bank and Trust in conjunction with the purchase of a building and land. The mortgage note calls for interest at an annual rate of 12 percent (1 percent per month). The note is fully amortizing over a period of 360 months. The bank sent Speedy Lube an amortization table showing the allocation of monthly payments between interest and principal over the life of the loan. A small part of this amortization table is illustrated as follows. (For convenience, amounts have been rounded to the nearest dollar.) AMORTIZATION TABLE (12%, 30-YEAR MORTGAGE NOTE PAYABLE FOR $1,080,000; PAYABLE IN 360 MONTHLY INSTALLME Interest Period Payment Date Monthly Payment Interest Expense Principal Reduction Ur Issue date Sept. 1, 2021 1 Oct. 1 $11,110 $10,800 $310 Nov. 1 11,110 10,797 313 Instructions a. Explain whether the amounts of interest expense and the reductions in the unpaid principal are likely to change in any predictable pattern from month to month. b. Prepare journal entries to record the first two monthly payments on this mortgage. c. Complete this amortization table for two more monthly installments–those due on December 1, 2021, and January 1, 2022. (Round amounts to the nearest dollar.)

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q