Amortization Schedule:

To construct an amortization schedule for the loan, we need to calculate the monthly payment, interest payment, principal payment, and outstanding balance for each month.

Step 1: Calculation of Monthly Payment:
The formula to calculate the monthly payment for a loan is given by:
\[M = \frac{P \cdot r \cdot (1+r)^n}{(1+r)^n-1}\]
Where,
M = Monthly Payment
P = Principal Loan Amount
r = Monthly Interest Rate (Annual Interest Rate/12)
n = Total number of payments (12 for one year)

Given that Mr. X borrows rupees 1000 at 12% annual interest compounded monthly for one year, we can calculate the monthly payment using the above formula:

Principal Loan Amount (P) = Rs. 1000
Annual Interest Rate = 12%
Monthly Interest Rate (r) = 12%/12 = 1%

Using the formula, we get:
\[M = \frac{1000 \cdot 0.01 \cdot (1+0.01)^{12}}{(1+0.01)^{12}-1}\]
Simplifying the above equation, we find:
M = Rs. 88.34 (approx.)

Therefore, the monthly payment for the loan is approximately Rs. 88.34.

Step 2: Construction of Amortization Schedule:

Month Payment Interest Payment Principal Payment Outstanding Balance
1 Rs. 88.34 Rs. 10.00 Rs. 78.34 Rs. 921.66
2 Rs. 88.34 Rs. 9.21 Rs. 79.13 Rs. 842.53
3 Rs. 88.34 Rs. 8.43 Rs. 79.91 Rs. 762.62
4 Rs. 88.34 Rs. 7.63 Rs. 80.71 Rs. 681.91
5 Rs. 88.34 Rs. 6.82 Rs. 81.52 Rs. 600.39
6 Rs. 88.34 Rs. 6.00 Rs. 82.34 Rs. 518.05
7 Rs. 88.34 Rs. 5.18 Rs. 83.16 Rs. 434.90
8 Rs. 88.34 Rs. 4.35 Rs. 83.99 Rs. 350.91
9 Rs. 88.34 Rs. 3.50 Rs. 84.84 Rs. 266.07
10 Rs. 88.34 Rs. 2.66 Rs. 85.68 Rs. 180.39
11 Rs. 88.34 Rs. 1.80 Rs. 86.54 Rs. 93.85
12 Rs. 88.34 Rs. 0.94 Rs. 87.40 Rs. 6.45

Step 3: Paying Off the Remaining Balance:

After making three payments, Mr. X decides to pay off