Question - A company takes out a four-year, $760,000 mortgage on May 1. The interest rate on the loan is 8% per year, and blended payments of $18,554 (including both interest and principal) are to be made at the end of each month. The following is an extract from the loan amortization table the bank provided the company:
|
Beginning Loan
Balance
|
Payment
|
Interest
|
Principal
|
Ending Loan
Balance
|
|
Payment 1
|
760,000
|
18,554
|
5,067
|
13,487
|
745,513
|
|
Payment 2
|
746,513
|
18,554
|
4,977
|
13,577
|
732,936
|
|
Payment 3
|
732,936
|
18,554
|
4,886
|
13,668
|
719,268
|
|
Payment 4
|
719,268
|
18,554
|
4,795
|
13,759
|
705,509
|
Prepare the journal entries to record the inception of the loan and the first two monthly payments.