The seller and the buyer agreed to a purchase price of $270,000 with the closing to occur on June 15. The seller's loan balance after the June 1 payment was $170,000. with an interest rate of 6%. The monthly payment was $1,800 principal and interest. What was the loan balance the day of closing, and how much interest did the seller owe the bank

Question

Yasmine Welch

Business

20 July, 14:35

The seller and the buyer agreed to a purchase price of $270,000 with the closing to occur on June 15. The seller's loan balance after the June 1 payment was $170,000. with an interest rate of 6%. The monthly payment was $1,800 principal and interest. What was the loan balance the day of closing, and how much interest did the seller owe the bank

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Nathanael Ashley · Answer 1

Loan balance is $170,000

Interest Due is $425

Explanation:

Loan outstanding is the amount of liability which payable by the business at any date. Interest is charged on the loan, yearly, semiannually, quarterly and monthly.

On Closing Day only 15 of interest has been accrued.

Interest Expense = Loan outstanding x Interest rate x Time portion = $170,000 x 6% x 15/360 = $425

So, Loan balance is $170,000

Interest Due is $425