On 1 April 2019, Exotica Ltd borrowed $56,870 from the bank at 10% per annum interest....

On 1 April 2019, Exotica Ltd borrowed $56,870 from the bank at 10% per annum interest. This loan was a secured loan and is was for one year. This loan is repayable in amounts of $5,000 at the end of each month. Required 1. In an excel spreadsheet prepare a journal entry to record the initial mortgage (1 mark). 2. Within the Excel spreadsheet prepare a mortgage schedule for this loan. Round your calculations to two decimal places and the nearest dollar 3. In the Excel spreadsheet, use the mortgage schedule to prepare the journal entries for loan repayments for April and May 2019 .

Expert Solution

Loan amortization schedule [ in $]

Months	Opening balance	payment	principal	Interest	Balance
1	56,870.00	5,000.00	4,526.08	473.92	52,343.92
2	52,343.92	5,000.00	4,563.80	436.20	47,780.12
3	47,780.12	5,000.00	4,601.83	398.17	43,178.28
4	43,178.28	5,000.00	4,640.18	359.82	38,538.10
5	38,538.10	5,000.00	4,678.85	321.15	33,859.25
6	33,859.25	5,000.00	4,717.84	282.16	29,141.41
7	29,141.41	5,000.00	4,757.15	242.85	24,384.26
8	24,384.26	5,000.00	4,796.80	203.20	19,587.46
9	19,587.46	5,000.00	4,836.77	163.23	14,750.69
10	14,750.69	5,000.00	4,877.08	122.92	9,873.61
11	9,873.61	5,000.00	4,917.72	82.28	4,955.89
12	4,955.89	5,000.00	4,955.89	44.11	0.00
	Total	60,000.00	56,870.00	3,130.00	0

Interest = Opening balance*10%
Principle = Total payment for the month- Interest.
Ending balance = Opening balance -Principle
Total payament = Principal +Interest
Total Interest paid = Total Repayment - Principal
=$60,000- $56,870
= $3,130

For the April month calculation is made as follows.

Interest = Principal * Interest

= $ 56870*0.10/12

= $473.92

Principal = $5000- $473.92

=$4526.08

Ending principal = $56870-$4526.08

=$52343.92

In the same way calculation is made for remaining months.

Journal entries are as follows.

JOURNAL ENTRIES IN THE BOOKS OF EXOTICA LTD
Date	particulars	DR	CR
01.01.2020	Bank A/c…………………………………………………………..DR	$56870
	To Secured loan A/c		$56870
	[ Being loan amount Disbursed ]

30.04.2020	Interest on loan A/c………………………………………….DR	359.82
	Secured Loan A/c……………………………………………….DR	4,640.18
	To Bank A/c		5,000.00
	[ Being payment of loan is made along with interest for the month of April]

30.05.2020	Interest on loan A/c………………………………………….DR	321.15
	Secured Loan A/c……………………………………………….DR	4,678.85
	To Bank A/c		5,000.00
	[ Being payment of loan is made along with interest for the month of May]

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