Superior Spirit Corp. borrowed $600,000 in the form of a mortgage on January 1, 2017, to finance the purchase of a large building. The mortgage rate is 6% and the term is 20 years, and semiannual payments of $25,957.43 are made on January 1 and July 1. The following chart shows the first five mortgage payments.

 

 

Semiannual Interest Period     Cash Payment                   Interest Expense          Reduction of Principle                               Principle Balance

Jan. 1, 2017                                                                                                                                                                                                                    $600,000

July 1 / 17                                  $25,957.43                                        18,000                                 7,957.43                                                    592,042.57

Jan. 1 / 18                                  $25,957.43                                         17,761.28                           8,196.15                                                    583,846.42

July 1 / 18                                  $25,957.43                                         17,515.39                           8,442.04                                                    575,404.38

Jan. 1 / 19                                  $25,957.43                                         17,262.13                           8,695.30                                                    566,709.08

July 1 / 19                                  $25,957.43                                         17,001.27                           8,956.16                                                    557,752.92

 

 

1.      Journalize the establishment of the mortgage and the first mortgage payment made on July 1, 2017.

2.      Show the balance-sheet presentation of this mortgage on December 31, 2017, separating the current and long-term portions.