Question

Glen Pool Club, Inc., has a $144,000 mortgage liability. The mortgage is payable in monthly installments of $1,481, 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) the allocation of the first two monthly payments between interest expense and the reduction in the mortgage’s unpaid balance. 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 the loan?

There is a screen shot for each table attached.

My math isn't working as it shuld be here and I am brain fried. Can anybody direct me into the correct direction?

Required A Required B Required C Prepare a partial amortization table showing (1) the original balance of this loan, and (2) the allocation of the first two monthly payments between interest expense and the reduction in the mortgage's unpaid balance. Round your answers to the nearest dollar amount. Enter all amounts as positive numbers.) Amortization Table Monthly Payment Interest Expense Monthly Interest Period Original balance Reduction in Unpaid Balance Unpaid Balance $ 1,481 $ 1,659 $ 1,440

Answer 1

1.

1st year

interest = 144000*1% = 1440$

total installment = principal+ interest

1481 = principal +1440

principal=1481-1440

=41$ will be reduced from principle amount of $ 144000

balance unpaid at the end of 1st year = 144000-41$ =143959$

2nd year

interest = 143959*1%=1440 (round off)

principle= 1481-1440 = 41$

balance unpaid at the end of second year = 143959-41$=143918$

monthly interest period	monthly payment	interest expense	reduction in unpaid balance	unpaid balance
1	1481	1440	$41	143959
2	1481	1440	$41	143918

2.second monthly installment payable

	interest expense	$1440
	mortgage payable	$41
	cash		$1481

3.MOTNTLY INTEREST DECREASES OVER THE LIFE OF LOAN.

Higher amount is adjusted towards the principal amount as the time passes. as the ending balance reduces with the passage of time also the interest is reduced.