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On December 1, Year 1, Bradley Corporation incurs a 15-year $200,000 mortgage liability in conjunction with...

On December 1, Year 1, Bradley Corporation incurs a 15-year $200,000 mortgage liability in conjunction with the acquisition of an office building. This mortgage is payable in monthly installments of $2,400, which include interest computed at the rate of 12% per year. The first monthly payment is made on December 31, Year 1.

How much of the first payment made on December 31, Year 1, represents interest expense?

a 2400

b 400

c 2304

d 2000

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Answer #1

Answer:

d . 2000

Explanation :

Interest expense = ($200000*12%)*1/12

= $24000 * 1/12

= $2000

First installment consist principle is $400 and interest is $2000.

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