[zemhana]

If land is purchsed through Bank it looks :

Land cost : $100,000.00
Interest : $10,000.00
Total Cost: $110,000.00

This payment to be for one year monthly installment $ 7,916.66.
I pay downpayment $15,000.00. And
First month Installment $7,916.66

For this transaction will be : (BANK A/C)
Date Description Dr. Cr. Balance
1/1/2008 Land through Bank $110,000.00 -$110,000.00
1/1/2008 Downpayment $15,000.00 -$95,000.00
31/1/2008 First Installment $7,916.66 -$87,083.34


But on February, 2008 I SOLD the land by $150,000.
So what will be the transactions to Bank, if I want to close their account, because there is Interest to be paid for one year?

[pready]

Yes the interest rate is determined by this formula:

Interest = Principal (Remaining Principal owed) * Rate (annual percentage Rate) * Time ( # of months used/ 12 mon ths or # of days / either 360 bankers rule or 365 days)