Question

In: Accounting

1. A corporation issues a $900,000, 10%, 25-year mortgage note. The terms provide for annual installment...

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

Solutions

Expert Solution

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

ekkarill92 answered 4 months ago
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