Issued at a Premium: Issuance, Interest, Payments, and Retirement LO 10-5, LO 10-6 EXERCISE 10.9 Accounting for Bonds Will monthly interest increase, decrease, or stay the same over the life of the loan? Explain your answer, including why in this case the amount of principal included in the first two payments is the same. Prepare the journal entry to record the second monthly payment.Ĭ. Prepare a partial amortization table showing (1) the original balance of this loan, and (2) the allocation of the first two monthly payments between interest expense and the reduction in the mortgage’s unpaid balance. The mortgage is payable in monthly installments of $1,543, which include interest computed at an annual rate of 12 percent (1 percent monthly).Ī. Inc., has a S 150,000 mortgage liability. LO 10-4 EXERCISE 10.6 Use of an Amortization Table From the book: Williams, Haka, Bettner and Carcello.įinancial and Managerial Accounting: The Basis for Business Decisions, Irwin-McGraw Hill, New York, 17th Ed.Ĭhapter 10: Exercises (starting on page 470).
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