Print by: KENYETTE WILLIAMS ACCT 2101-SP18-20502-Section IA-Online-Crews/ Homewo
ID: 2522826 • Letter: P
Question
Print by: KENYETTE WILLIAMS ACCT 2101-SP18-20502-Section IA-Online-Crews/ Homework- Chapter 10 Problem 10-7A Sheran Company issues a $407,00, 6%, 10-year mortgage note on December 31, 201. h. meien tom-oote are to b in financing a new research leboratory. The terms of the note provide for annusl installment payments, exclusive of real estate tases of $55,298, Payments are due on December 31. Prepare an instalment payments schedule for the first 4 years. (Round answers to 0 decimal pleces eo 1s,2s0.) Annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue Datse Prepare the entries for (1) the loen and (2) the first instaliment payment(Credit account ttles are automaticalily Indented when amount is entered. Do not indent manually. Record journat entries in the onder presented in the problem.) Dabe Account Titles and Explanation Credit Dec. 31, 2019 Show how the total mortgage leability should be reported on the balance sheet at Decemiber 31, 2019Emer acunt name anty ad Questien Attemptsi of 5 usedExplanation / Answer
Answer
Annual Interest Period
Cash payments (A)
Interest Expense (B = D x 6%]
Reduction of Principal [C=A – B]
Principal balance [D = D – C]
Issue Date
$ 4,07,000
1
$ 55,298
$ 24,420
$ 30,878
$ 3,76,122
2
$ 55,298
$ 22,567
$ 32,731
$ 3,43,391
3
$ 55,298
$ 20,603
$ 34,695
$ 3,08,697
4
$ 55,298
$ 18,522
$ 36,776
$ 2,71,921
Date
Accounts titles
Debit
Credit
31-Dec-18
Cash
$ 4,07,000
Notes payable
$ 4,07,000
(notes issued)
31-Dec-19
Notes payable
$ 30,878
Interest expense
$ 24,420
Cash
$ 55,298
(1st instalment paid)
In Balance sheet, only Notes payable will be reflected, because as at 31 Dec, no interest payable has been accrued, the same has already been paid on 31 Dec.
Balance Sheet
as at 31 Dec, 2019
Long Term Liabilities
Notes payable [as per requirement 1, Year 1 end balance]
$ 3,76,122
Annual Interest Period
Cash payments (A)
Interest Expense (B = D x 6%]
Reduction of Principal [C=A – B]
Principal balance [D = D – C]
Issue Date
$ 4,07,000
1
$ 55,298
$ 24,420
$ 30,878
$ 3,76,122
2
$ 55,298
$ 22,567
$ 32,731
$ 3,43,391
3
$ 55,298
$ 20,603
$ 34,695
$ 3,08,697
4
$ 55,298
$ 18,522
$ 36,776
$ 2,71,921
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