Detwiler Orchard issues a $640,000, 6%, 15-year mortgage note to obtain needed financing for a new...

Detwiler Orchard issues a $640,000, 6%, 15-year mortgage note to obtain needed financing for a new lab. The terms call for annual payments of $65,896 each.

Prepare the entries to record the mortgage loan and the first installment payment.

Expert Solution

Working Notes:

REPAYEMETNT SCHEDULE
	December.31	Year 1 (Carrying Amount)	Note Payament (Cash Paid )	Interest Expenses (6% of Jan.01 Note Carrying Amount)	Decrease in note Payable	Carrying Amount at Year End
1	Year 1	$ 640,000	$ 65,896	$ 38,400	$ 27,496	$ 612,504



Solution:

Journal Entries
Date	Account Title and explanation	Debit	Credit

Year 1 Jan.01	Cash	$ 640,000
	Note Payable		$ 640,000
	(To record the issue of mortgage note)


Year 1 Dec. 31	Interest Expenses	$ 38,400
	Note Payable	$ 27,496
	Cash		$ 65,896
	(To record the first interest installment Payment)

ekkarill92 answered 2 years ago

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