Answer:
January 31
Interest expense 3750(Dr.)
Notes payable 1321.33(Dr.)
Cash 5071.33(Cr.)
Explanation:
Purchase price = $610,000
Down payment = $110,000
Borrowing = $500,000
Period = 15 years
Rate = 9%
Installment Payment per month = $5,071.33
With first payment due on January 31, 2020;
Mortgage amount or carrying value = $500,000
Interest = 0.09 × (1/12) × 500,000 = $3,750
Monthly payment = $5,071.33
Decrease in carrying value or mortgage amount = $5071.33 - $3750 = $1321.33
January 31
Interest expense 3750(Dr.)
Notes payable 1321.33(Dr.)
Cash 5071.33(Cr.)
