In: Accounting
1.
A corporation issues a $900,000, 10%, 25-year mortgage note. The terms provide for annual installment payments of $99,151. What is the remaining unpaid principal balance of the mortgage payable account after the second annual payment?
Group of answer choices
$889,689
$890,849
$887,689
$880,782
$889,374
Answer: |
Annual Installment Amuount = $ 99,151 |
First year Interest Expense = $ 900,000 x 10% = $ 90,0000 |
Amount of Principle in
Installment = $ 99,151, (-) $ 90,000 = $ 9,151 |
Reamaining principal after First
annaul payment = $ 900,000 (-) $ 9,151 = $ 890,849 |
Second year Interest Expense = $ 890,849 x 10% = $ 89,084 |
Amount of Principle in
Installment = $ 99,151, (-) $ 89,084 = $ 10,067 |
Reamaining principal after First
annaul payment = $ 890,849 (-) $ 10,066 = $ 880,782 |
Remaining unpaid principal balance of the mortgage payable account after the second annual payment = $ 880,782 |
Option (d) is Correct |