On January 1, 2018, Gundy Enterprises purchases an office for $283,000, paying $
ID: 2591816 • Letter: O
Question
On January 1, 2018, Gundy Enterprises purchases an office for $283,000, paying $53,000 down and borrowing the remaining $230,000, signing a 8%, 10-year mortgage. Installment payments of $2,790.53 are due at the end of each month, with the first payment due on January 31, 2018.
2. Complete the first three rows of an amortization schedule
3-a. Record the first monthly mortgage payment on January 31, 2018
Record the first monthly mortgage payment.
Note: Enter debits before credits.
3-b. How much of the first payment goes to interest expense and how much goes to reducing the carrying value of the loan
Interest Expense Reducing the Carrying Value
First payment
Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 01/01/18 $230,000.00 01/31/18 2,790.53 02/28/18 2,790.53Explanation / Answer
2 Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 01-01-2018 230000 01/31/18 2,790.53 1533 1,257.53 2,28,742.47 02/28/18 2,790.53 1525 1,265.53 2,27,476.94 3a Jan-31 Interest expense 1533 Notes payable 1,257.53 Cash 2,790.53 3b Interest Expense = 1533 Reducing the Carrying Value = 1257.33