Question

Norton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,500. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

Answer 1

The amount owed on the mortgage after the first payment will be a. $479,500.

Amount owed:

Amount owed=$480,000- [$4,500- ($480,000 x .10 x 1/12)]

Amount owed=$ 480,000 - ($4,500-$4,000)

Amount owed=$ 480,000 -$500

Amount owed = $479,500

Journal entry

Debit Mortgage interest expense $4000

[480,000 x .10 x 1/12)]

Debit Mortgage payable $500

($4,500-$4,000)

Credit Cash $4,500

Inconclusion the amount owed on the mortgage after the first payment will be a. $479,500.

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