In: Accounting
A DEBIT to Interest Expense of 1,087.50.
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A DEBIT to Interest Expense of 1,086.03.
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A DEBIT to Interest Expense of 407.41.
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A DEBIT to Mortgage Payable of 1,087.50.
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A DEBIT to Mortgage Payable of 1,086.03.
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A DEBIT to Mortgage Payable of 405.94.
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Correct answer---------A DEBIT to Mortgage Payable of 405.94.
Working
Date | Mortgage beginning balance | Interest on mortgage | Installment | Reduction mortgage payment | Ending balance of mortgage |
Jul-01 | $ 3,00,000.00 | $ 1,085.00 | $ 3,01,085.00 | ||
Aug-01 | $ 3,01,085.00 | $ 1,088.92 | $ 1,493.44 | $ 404.52 | $ 3,00,680.48 |
Sep-01 | $ 3,00,680.48 | $ 1,087.46 | $ 1,493.44 | $ 405.98 | $ 3,00,274.51 |
Interest expense will not be recorded on 1st day of the month. Interest will be accrued and recorded on last day of month so Interest for aug will be recorded on Aug 31 which is $1087.46