Question

Need answers

Glen Pool Club, Inc., has a $150,000 mortgage liability. The mortgage is payable in monthly tallments of $1,543, which include interest computed at an annual rate of 12 percent (1 percent monthly). a. Prepare a partial amortization table showing (1) the original balance of this loan, and (2) allocation of the first two monthly payments between interest expense and the reduction mortgage's unpaid balance. (Round to the nearest dollar.) and the eand (2) the b. Prepare the journal entry to record the second monthly payment. c. Will monthly interest increase, decrease, or stay the same over the life of your answer

Answer 1

a.
1	2	3	4	5
No. of months	Monthly Installment	Tow. Int.	Tow. Principal	Principal balance
		Last Col. 5*1%	Col.2-3	Prev.5-Col.4
0				150000
1	1543	1500	43	149957
2	1543	1499.57	43.43	149914

b.
Interest expense	1499.57
Mortgage Liability	43.43
Cash		1543
(2nd Mthly. Installment)

c. Monthly interest will decrease --as with every monthly payment ,some more amount of principal balance is repaid & thus principal balance ,on which interest is calculated, keeps decreasing. So,interest expense decreases with every payment