Mortgage Amortization and Liability
Not what you're looking for?
On September 30, 2009, Dixon Inc. incurs a 30-year $700,000 mortgage liability in conjunction with its purchase of a candy factory. This mortgage is payable in equal monthly installments of $3,758 which include interest computed at an annual rate of 5%. The first monthly payment is made on October 31, 2009. This mortgage is fully amortizing over 30 years. Complete the amortization table for the first four payments by entering the correct dollar amounts in the blank spaces provided. In addition, answer the questions which follow.
Date Payment Interest Principal Balance
Issuance $700,000.00
Oct. 31, 2009 $3,758.00
Nov. 30, 2009 $3,758.00
Dec. 31, 2009 $3,758.00
Jan. 31, 2010 $3,758.00
(a) With respect to this mortgage, Dixon's 2009 income statement includes interest expense of ?
(b) At December 31, 2009, Dixon's balance sheet includes a total liability for this mortgage of ? (do not separate into current and long-term portions.)
(c) The total of the monthly cash payments Dixon will make over the 30-year life of the mortgage is ?
(d) Over the 30-year life of the mortgage the amount Dixon will pay for interest amounts to ?
Please create the journal entry for the January 31, 2010 mortgage payment, assuming the debt was originally recorded as "Mortgage Debt."
Date Account Debit Credit
Purchase this Solution
Solution Summary
Given facts concerning a mortgage, this solution illustrates how to complete a mortgage amortization schedule. It also shows how to compute the total interest expense for the period and the debt at the end of the period, as well as the total amount paid and interest paid over the life of the loan.
Purchase this Solution
Free BrainMass Quizzes
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media