Accounting for a Mortgage
Response to the following problem:
Kohler Kleaners borrowed $50,000 on June 1, 2009, to finance the purchase of a building. The mortgage requires payments of $525 to be made at the end of every month for 12 years with the first payment being due on June 30, 2009. The interest rate on the mortgage is 8%.
1. Prepare a mortgage amortization schedule for 2009.
2. How much interest will be paid in 2009?
3. By how much will the principal amount of the mortgage be reduced by the end of 2009?