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AP10-1A (Journal entries for a loan) A company takes out a five-year, $1-million mortgage on October 1. The interest rate on the loan is 6% per year, and blended payments of $19,333 (including both interest and principal) are to be made at the end of each month. The following is an extract from the loan amortization table the bank provided the company: Beginning Loan Balance Ending Loan Balance Payment Interest Principal Payment 1 $19,333 $5,000 $1,000,000 985,667 $14,333 14,405 $985,667 971,262 Payment 2 19,333 4,928 Payment 3 971,262 19,333 4,856 14,477 956,785 Payment 4 956,785 19,333 4,784 14,549 942,236 Required a. The monthly payments will be the same amount each month, throughout the entire term of the loan. From the loan amortization table, we can see that the portion of the payment related to interest is decreasing each payment. Prepare a brief explanation for why this is happening. b. Prepare the journal entries to record the inception of the loan and the first two monthly payments. AP10-1A (Journal entries for a loan) A company takes out a five-year, $1-million mortgage on October 1. The interest rate on the loan is 6% per year, and blended payments of $19,333 (including both interest and principal) are to be made at the end of each month. The following is an extract from the loan amortization table the bank provided the company: Beginning Loan Balance Ending Loan Balance Payment Interest Principal Payment 1 $19,333 $5,000 $1,000,000 985,667 $14,333 14,405 $985,667 971,262 Payment 2 19,333 4,928 Payment 3 971,262 19,333 4,856 14,477 956,785 Payment 4 956,785 19,333 4,784 14,549 942,236 Required a. The monthly payments will be the same amount each month, throughout the entire term of the loan. From the loan amortization table, we can see that the portion of the payment related to interest is decreasing each payment. Prepare a brief explanation for why this is happening. b. Prepare the journal entries to record the inception of the loan and the first two monthly payments

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