Question

March 1. 2016: borrowed $400,000 from Coconut creek bank. The eight-year 5% note requires payments due annually on March 1. Each payment consists of $50,000 Principal plus one year’s interest. December 1. 2016: Mortgaged the warehouse for $150,000 cash with Saban Bank. The mortgage requires monthly payments of $6,000. The interest rate on the note is 6% and accrues monthly. The first payment is due on January 1, 2017. December 31, 2016: Recorded interest accrued on the Saban Bank note. December 31, 2016: recorded interest accrued on the Coconut Creek Bank note. Jan. 1, 2017: Paid Saban Bank monthly mortgage payment. Feb 1, 2017: Paid Saban Bank monthly mortgage payment. March 1, 2017: Paid Saban Bank monthly mortgage payment. March 1, 2017: Paid first installment on note due to Coconut Creek Bank. Prepare the liabilities section of the balance sheet for Green Pharmacies on March 1, 2017 after all the journal entries are recorded. First, prepare an amortization schedule for the Saban Bank mortgage to March 1, 2018. Prepare the schedule for the first three payments, then the remaining months one at a time. (Round your answers to the nearest whole dollar.) Review the related journal entries you prepared in Requirement 1 Beginning Principal Interest Total Ending Balance Payment Expense Payment Balance 12/01/2016 1/01/2017 2/01/2017 3/01/2017 4/01/2017 5/01/2017 6/01/2017 07/01/2017 08/01/2017 9/01/2017 10/01/2017 11/01/2017 12/01/2017 1/01/2018 2/01/2018 3/01/2018 Now prepare the liabilities section of the balance sheet for Green Pharmacies on March 1, 2017. (If a box is not used in the table leave the box empty; do not enter a zero.) Review the amortization schedule you prepared above. Green Pharmacies Balance Sheet (Partial) March 1, 2017 Liabilities.

Answer 1

Answer 1.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Mar-16	Cash	400,000
	Notes Payable - 5%		400,000
	(Record the amount borrowed)
31-Dec-16	Cash	150,000
	Mortgage Payable		150,000
	(Record the mortgaged the warehouse)
31-Dec-16	Interest Expense	16,667		$400,000 X 5% X 10/12
	Interest Payable		16,667
	(record the interest accrued)
1-Jan-17	Mortgage Payable	6,000
	Cash		6,000
	(record the installment paid)
1-Feb-17	Mortgage Payable	5,280		$6,000 - $720
	Interest Expense	720		($150,000 - $6,000) X 6% X 1/12
	Cash		6,000
	(record the installment paid)
1-Mar-17	Notes Payable - 5%	30,000		$50,000 - ($16,667 + $3,333)
	Interest Payable	16,667
	Interest Expense	3,333		$400,000 X 5% X 2/12
	Cash		50,000
	(record the installment paid - note)

Answer 2.
Amortization Schedule - Mortgage Payable
Date	Beg. Bal.	Total Payment	Interest Expense	Principal Payment	End. Bal.
31-Dec-16	150,000	-	-	-	150,000
1-Jan-17	150,000	6,000	-	6,000	144,000
1-Feb-17	144,000	6,000	720	5,280	138,720
1-Mar-17	138,720	6,000	694	5,306	133,414
1-Apr-17	133,414	6,000	667	5,333	128,081
1-May-17	128,081	6,000	640	5,360	122,721
1-Jun-17	122,721	6,000	614	5,386	117,335
1-Jul-17	117,335	6,000	587	5,413	111,921
1-Aug-17	111,921	6,000	560	5,440	106,481
1-Sep-17	106,481	6,000	532	5,468	101,013
1-Oct-17	101,013	6,000	505	5,495	95,518
1-Nov-17	95,518	6,000	478	5,522	89,996
1-Dec-17	89,996	6,000	450	5,550	84,446
1-Jan-18	84,446	6,000	422	5,578	78,868
1-Feb-18	78,868	6,000	394	5,606	73,263
1-Mar-18	73,263	6,000	366	5,634	67,629

Answer 3.
Balance Sheet (Partial)
As on Mar 1, 2017
Liabilities
Notes Payable - $400,000 - $30,000	370,000
Mortgage Payable	133,414
Total Liabilities	503,414