Question

Talkington Electronics issues a $400,000, 8%, 15-year mortgage note on December 31, 2019. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of $59,612. Payments are due on December 31.

Prepare installment payments schedule and journal entries for a mortgage note payable.

Instructions

1. Prepare an installment payments schedule for the first 4 years.
2. Prepare the entries for (1) the loan and (2) the first installment payment.
3. Show how the total mortgage liability should be reported on the balance sheet at December 31, 2020.

Please show all work!

Answer 1

Answer:

Installment Payments schedule for the first 4years:

Year	Beginning Balance	Interest(8%)	Total	PMT	End Balance (Total - PMT)
1	400000	32000	432000	59612	372388
2	372388	29791	402179	59612	342567
3	342567	27405	369972	59612	310360
4	310360	24829	335189	59612	275577

Eantries for:

1. The Loan

1.	Cash A/C.....................Dr		400000
	To Mortgage Payable A/C			400000

2. The First Installment Payment

2.	Mortgage Payable Payment A/C..........Dr		27612
	Interest Expense A/C..........................Dr		32000
	To Cash A/C			59612

The total mortgauge liability should be reported on the balance sheet at december 31 2020.

The Total Liability is $372388. But there is one payment due within one year That makes That portion a current liability. Dec20

Long-term liabilities

Mortgauge Payable.................................312776

Current portion of long-term liability.........59612

Thankyou.