On September 1 2011 Quick Lube signed a 30 year 1 080

000
On September 1, 2011, Quick Lube signed a 30-year, $1,080,000 mortgage note payable to
Mifflinburg Bank and Trust in conjunction with the purchase of a building and land. The
mortgage note calls for interest at an annual rate of 12 percent (1 percent per month). The note
is fully amortizing over a period of 360 months. The bank sent Quick Lube an amortization table
showing the allocation of monthly payments between interest and principal over the life of the
loan. A small part of this amortization table is illustrated below. (For convenience, amounts have
been rounded to the nearest dollar.)Instructions a. Explain whether the amounts of interest
expense and the reductions in the unpaid principal are likely to change in any predictable
pattern from month to month. b. Prepare journal entries to record the first two monthly payments
on this mortgage. c. Complete this amortization table for two more monthly installments—those
due on December1, 2011, and January 1, 2012. (Round amounts to the nearest dollar.)d. Will
any amounts relating to this 30-year mortgage be classified as current liabilities in Quick Lube’s
December 31, 2011, balance sheet? Explain, but you need not compute any additional
dollaramounts.
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On September 1 2011 Quick Lube signed a 30 year 1 080 000
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