Question

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. 125.)

Annual Interest Period		Cash Payment		Interest Expense		Reduction of Principal		Principal Balance
Issue Date		$ enter a dollar amount		$ enter a dollar amount		$ enter a dollar amount		$ enter a dollar amount
1		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
2		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
3		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
4		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
5		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount	*

* Amount may be off due to rounding.

eTextbook and Media

eTextbook 1

eTextbook 2

List of Accounts

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	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on december 31	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

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.)

LAVERNE Balance Sheet (Partial) December 31, 2017
select an opening name for subsection oneselect an opening name for subsection one  Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item			$ enter a dollar amount
select an opening name for subsection twoselect an opening name for subsection two  Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item			enter a dollar amount
select a closing name for this sectionselect a closing name for this section  Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity			$ enter a total amount for this section

Answer 1

Amortization table

Year	Cash payment	Interest expense	Reduction of Principal	Principal Balance
Issue date				391500
1	95483	27405	68078	323422
2	95483	22640	72843	250579
3	95483	17541	77942	172637
4	95483	12085	83398	89239
5	95483	6244	89239	0

Journal entry

Date	account and explanation	debit	credit
Dec 31,2017	Interest expense	27405
	Mortgage notes payable	68078
	Cash		95483
	(To record installment)

Partial balance sheet

Current liabilities
Mortgage note payable	72843
Long term liabilities
Mortgage note payable	250579
Total liabilities	323422