Problem 10-5A Talkington Electronics issues a $440,000, 11%, 10-year mortgage no

Question

Problem 10-5A

Talkington Electronics issues a $440,000, 11%, 10-year mortgage note on December 31, 2016. 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 $74,713. Payments are due on December 31.

Prepare an installment payments schedule for the first 4 years. (Round answers to 0 decimal places, e.g. 15,250.)

Annual Interest Period

Cash Payment

Interest Expense

Reduction of Principal

Principal Balance

Issue Date

Prepare the entries for (1) the loan and (2) the first installment payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2017

Annual Interest Period

Cash Payment

Interest Expense

Reduction of Principal

Principal Balance

Issue Date

$

1 $

$

$

2

3

4

Explanation / Answer

Annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue date 440000 1 74713 48400 26313 413687 2 74713 45506 29207 384480 3 74713 42293 32420 352060 4 74713 38727 35986 316074 Dec-31-16 Cash 440000       Notes payable 440000 Dec-31-17 Interest Expense 48400 Notes payable 26313        Cash 74713

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