Question

Emily, Bev, and Doug had originally thought that the computer equipment upgrade that ABC decided to undertake could be paid for with cash in the bank. As at June 25, 2024, the balance of the 5% mortgage payable after making the payment on that day was $46,296. Monthly principal and interest instalment payments are \$647, paid on the 25 th of each month. The mortgage is up for renewal on November 25,2024 . Because interest rates have fallen since the original mortgage was signed, it can be renewed at an interest rate of 4%, in addition, Emily has decided to reduce the mortgage term to five years, instead of the seven years remaining The ABC upgraded its server and other computing equipment. Unfortunately, there was not enough cash to pay for the equipment. ABC arranged for a $40,000 operating line of credit with its bank, using $23,000 of this line to finance this upgrade. Emily would like to pay off the operating line of credit by transferring the $23,000 owed on the line to the mortgage payable balance outstanding instead of trying to pay the balance owed on the line of credit from cash generated from operations. The bank has agreed to accommodate both of these requests and has advised that the monthly instalment payments will be $1,234 for the combined amounts and revised term, with payments starting on December 25,2024. (a) If the amount of mortgage owing was $46,296 on June 25 , and instalment payments are $647 per month, as indicated above, what is the amount of the mortgage owing at November 25, 2024, after making the payment on that date, immediately before it is renegotiated? (Round answer to 0 decimal places, es. 5,275.) Amount of the mortgage owing at November 25,2024 $ Assume that ABC increases the mortgage payable amount you determined in the previous part by $23,000, the amount of the line of credit outstanding at November 25, 2024. What is the revised amount of the mortgage payable at November 25? Revised amount of the mortgage payable Record the increase in the mortgage payablet on November 25, 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the occount titles and enter O for the amounts List alldebit entries before credit entries.) Prepare an instalment payment schedule using the revised instalment payments of $1,234, from December 25,2024 , to June 25 , 2026. (Round answers to 0 decimal places, es. 5,275.) Prepare an instalment payment schedule using the revised instalment payments of $1,234, from Decernber 25,2024 , to June 25 , 2026. (Round answers to 0 decimal places e 9 5,275.)

Answer 1

The amount of the mortgage owing at November 25, 2024 is $43,061. The revised amount of the mortgage payable at November 25, 2024 is $66,061. The total amount paid from December 25, 2024, to June 25, 2026 is $22,212.

Step-by-step explanation:

To calculate the amount of the mortgage owing at November 25, 2024, we need to determine the number of months between June 25, 2024, and November 25, 2024. There are 5 months in between. The monthly instalment payments are $647, so the amount paid by that date is $647 * 5 = $3,235. Subtracting this amount from the mortgage owing on June 25, 2024, we get $46,296 - $3,235 = $43,061.

To calculate the revised amount of the mortgage payable at November 25, 2024, we add the $23,000 outstanding on the line of credit to the mortgage payable amount. Therefore, the revised amount is $43,061 + $23,000 = $66,061.

To prepare an instalment payment schedule using the revised instalment payments of $1,234 from December 25, 2024, to June 25, 2026, we need to calculate the number of months in that period. There are 18 months in between. Multiplying the monthly payment by the number of months gives us $1,234 * 18 = $22,212, which is the total amount paid during that period.