Problem 3: Dutch Hollow Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2011. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.

Required

1. a) Prepare an installment payments schedule for the first 2 years.

2. b) Prepare the entries for (1) the loan and (2) the first four installment payments.