Elite Electronics issues a $450,000, 10-year, 7.5% mortgage note payable on December 31, 2021. The terms of
Question:
Elite Electronics issues a $450,000, 10-year, 7.5% mortgage note payable on December 31, 2021. The terms of the note provide for semi-annual fixed principal payments of $22,500, plus interest, on June 30 and December 31. Elite Electronics’ year end is December 31.
Instructions
a. Prepare an instalment payment schedule for the first two years. Round all calculations to the nearest dollar.
b. Record the issue of the mortgage note payable on December 31, 2021.
c. Show how the mortgage liability should be reported on the balance sheet at December 31, 2022. Remember to report any current portion separately from the non current liability.
d. Record the first two instalment payments on June 30, 2022, and December 31, 2022.
Taking It Further
If the semi-annual payments were blended, would the amount of cash paid on a semi-annual basis be greater than, equal to, or less than the fixed principal payments made for the first two instalments? For the last instalment?
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a b 2021 Dec 31 Cash 450000 Mortgage Note Payable 450000 To record issuance of note c ELITE ELECTRON...View the full answer
Accounting Principles Volume 2
ISBN: 978-1119502555
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
