Lisa Ehrlich Inc. issued a $1,300,000, 10%, 10-year mortgage note on December 31, 2020, to obtain financing for a new building. The terms provide for annual installment payments of $225,000.

Instructions

a. Prepare the entry to record the mortgage loan on December 31, 2020

b. Prepare a mortgage schedule and entries to record the first and second installment payments on December 31, 2021 and 2022.

c. Calculate the principal balance on December 31, 2022 after the installment payment is made.