Accounting for mortgages (Learning Objective 5) 20–25 min.

Paiscik, Corp., completed the following transactions in 2014:

Jan 1 Jun 30 Dec 1 31 31 31 Purchased a building costing $180,000 and signed an 11%, 30-year mortgage note payable for the same amount.

Made the first semiannual payment on the mortgage note payable.

Signed a five-year lease to rent a warehouse for $12,000 per month due at the end of each month. The lease is considered an operating lease.

Paid for one month’s rent on the warehouse.

Leased 10 copiers and signed a four-year lease with the option to buy the copiers at the end of the fourth year at a bargain price. Under terms of the lease, monthly lease payments do not start until January 31, 2016. The present value of the lease payments is $33,000.

Made the second semiannual payment on the mortgage note payable.

Requirements 1. Complete the following amortization schedule for the first four mortgage payments on the $180,000 mortgage note, assuming semiannual payments of

$13,077. Round amounts to the nearest dollar.

Jan 1, 2014 Jun 30, 2014 Dec 31, 2014 Jun 30, 2015 Dec 31, 2015 Date Interest

$13,077 Payment Principal

$180,000 Loan Balance 2. Record the journal entries for the 2014 transactions.

3. Prepare the long-term liabilities section of the balance sheet on December 31, 2014.

AppendixLO1