On January 1, 2018, Gundy Enterprises purchases an office for $184,000, paying $
ID: 2522791 • Letter: O
Question
On January 1, 2018, Gundy Enterprises purchases an office for $184,000, paying $44,000 down and borrowing the remaining $140,000, signing a 7%, 10-year mortgage. Installment payments of $1,625.52 are due at the end of each month, with the first payment due on January 31, 2018. 1. Record the purchase of the building on January 1, 2018. 2. Complete the first three rows of an amortization schedule. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Required: 3-a. Record the first monthly mortgage payment on January 31, 2018. 3-b. How much of the first payment goes to interest expense and how much goes to reducing the carrying value of the loan?
Explanation / Answer
1)
2)
3a)
3b) interest expense =$ 840
reducing the carrying value of the loan = $ 785.52
Date Account Debit credit Jan 1 2018 Building 184000 cash 44000 Mortgage payable 140000 [being building purchased]