Dreiling Company borrowed $300,000 on January 1, 2020, by issuing a $300,000, 8% mortgage note payable. The terms call for annual installment payments of $40,000 on December 31.

Prepare entries to record mortgage note and installment payments.

Instructions

• a. Prepare the schedule and journal entries to record the mortgage loan and the first two installment payments.
• b. Indicate the amount of mortgage note payable to be reported as a current liability and as a long-term liability at December 31, 2020.