The transactions would debit the mortgage payment of $635.52, credit the cash account with $1,277.19, and credit the interest charge of $641.67.
<h3>A mortgage is what?</h3>
Although some lenders provide 20-year periods and others even let borrowers choose their own length, most fixed-rate mortgages have a 30-year or 15-year term. Before committing to a mortgage, homebuyers should take all available home loan options into account.
Payable Dr. Mortgage: $635.52
Dr interest expenditure $641.67 Cr cash $1,277.19
The initial payment made on the mortgage is $1,277.19, which may be divided into the principal repayment of $110,000 and the interest on the mortgage.
interest for the first month equals $110,000 * 7% * 1/12 = $641.67
Usually, the payment made consists of $635.52 ($1,277.19-$641.67) for the principal payments and $641.67 for the interest.
The entries would credit cash with $1,277.19, debit mortgage payment with $635.52, and debit interest charge with $641.67.
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