Problem
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.
Required questions:
1. Record the purchase of the building on January 1, 2018
2. Complete the first three rows of an amortization schedule.
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?
4. Total payments over the 10 years are $334,864 ($2,790.53 × 120 monthly payments). How much of this is interest expense and how much is actual payment of the loan?