Question

Laverne purchased a new piece of equipment to be used in its new facility. The $...

Laverne purchased a new piece of equipment to be used in its new facility. The $ 380,000 piece of equipment was purchased with a $ 57,000 down payment and with cash received through the issuance of a $ 323,000,  8%,  5-year mortgage payable issued on January 1, 2017. The terms provide for annual installment payments of $80,897 on December 31.

Prepare an installment payments schedule for the first five payments of the notes payable. (Round answers to 0 decimal places, e.g. 125.)

Annual
Interest Period
Cash
Payment
Interest
Expense
Reduction
of Principal
Principal
Balance
Issue Date
1
2
3
4
5

* Amount may be off due to rounding.

Prepare the journal entry related to the notes payable for December 31, 2017. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit Credit
Dec. 31

Show the balance sheet presentation for this obligation for December 31, 2017. (Hint: Be sure to distinguish between the current and long-term portions of the note.) (Round answers to 0 decimal places, e.g. 125.)

Partial Balance Sheet (mm/dd/yyyy)
_____________
_____________ $__________
_____________
_____________ $__________
_____________ $__________

Homework Answers

Answer #1

Amortization table

Year Cash payment Interest expense Reduction
of Principal
Principal
Balance
Issue date 323000
1 80897 25840 55057 267943
2 80897 21435 59462 208481
3 80897 16678 64219 144262
4 80897 11541 69356 74906
5 80897 5991 74906 0

Journal entry

Date account and explanation debit credit
Dec 31,2017 Interest expense 25840
Mortgage notes payable 55057
Cash 80897
(To record installment)

Partial balance sheet

Current liabilities
Mortgage note payable 59462
Long term liabilities
Mortgage note payable 208481
Total liabilities 267943
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Laverne purchased a new piece of equipment to be used in its new facility. The $...
Laverne purchased a new piece of equipment to be used in its new facility. The $ 435,000 piece of equipment was purchased with a $ 43,500 down payment and with cash received through the issuance of a $ 391,500,  7%,  5-year mortgage payable issued on January 1, 2017. The terms provide for annual installment payments of $ 95,483 on December 31. Prepare an installment payments schedule for the first five payments of the notes payable. (Round answers to 0 decimal places, e.g....
Oriole Electronics issues a $420,500, 4%, 15-year mortgage note on December 31, 2019. The proceeds from...
Oriole Electronics issues a $420,500, 4%, 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 $51,844. 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...
On January 1, 2017, Sunland Company had a balance of $ 388,000 of goodwill on its...
On January 1, 2017, Sunland Company had a balance of $ 388,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions. Jan. 2 Purchased a patent ( 5-year life) $ 360,150. July 1 Acquired a 10-year franchise; expiration date July 1, 20 27, $ 576,000. Sept 1 Research and development costs $ 178,500.      ...
Pronghorn Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December...
Pronghorn Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $46,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Pronghorn’s incremental borrowing rate is 9%. Pronghorn is unaware of the rate being used by the lessor. At the end of the lease, Pronghorn has the option to buy the...
Problem 10-07A a-c (Part Level Submission) Larkspur, Inc. issues a $441,000, 10%, 10-year mortgage note on...
Problem 10-07A a-c (Part Level Submission) Larkspur, Inc. issues a $441,000, 10%, 10-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 $71,771. Payments are due on December 31. (a) Prepare an installment payments schedule for the first 4 years. (Round answers to 0 decimal places, e.g. 15,250.) Annual Interest...
On January 1, 2017, Flounder Company purchased 12% bonds having a maturity value of $390,000, for...
On January 1, 2017, Flounder Company purchased 12% bonds having a maturity value of $390,000, for $419,567.77. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Flounder Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. (Enter answers to 2...
Larkspur Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to...
Larkspur Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2017, to expand its production capacity to meet customers’ demand for its product. Larkspur issues a(n) $912,000, 5-year, zero-interest-bearing note to Central Michigan for the new equipment when the prevailing market rate of interest for obligations of this nature is 11%. The company will pay off the note in five $182,400 installments due at the end of each year over the life of the note. a...
1?Straight Industries purchased a large piece of equipment from Curvy Company on January 1, 2016. Straight...
1?Straight Industries purchased a large piece of equipment from Curvy Company on January 1, 2016. Straight Industries signed a note, agreeing to pay Curvy Company $430,000 for the equipment on December 31, 2018. The market rate of interest for similar notes was 8%. The present value of $430,000 discounted at 8% for three years was $341,348. On January 1, 2016, Straight Industries recorded the purchase with a debit to equipment for $341,348 and a credit to notes payable for $341,348....
Exercise 9-12 On January 1, 2017, Carla Vista Co. had a balance of $321,500 of goodwill...
Exercise 9-12 On January 1, 2017, Carla Vista Co. had a balance of $321,500 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions. Jan. 2 Purchased a patent (6-year life) $376,950. July 1 Acquired a 8-year franchise; expiration date July 1, 2025, $547,200. Sept. 1 Research and development costs $185,500. Prepare the necessary entries to...
On December 31, 2020, Oriole Company acquired a computer from Plato Corporation by issuing a $570,000...
On December 31, 2020, Oriole Company acquired a computer from Plato Corporation by issuing a $570,000 zero-interest-bearing note, payable in full on December 31, 2024. Oriole Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $67,000 salvage value. A )Prepare the journal entry for the purchase on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT