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 |
|
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) | |
_____________ | |
_____________ | $__________ |
_____________ | |
_____________ | $__________ |
_____________ | $__________ |
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 |
Get Answers For Free
Most questions answered within 1 hours.