Please help and show work Talkington Electronics issues a $366,500, 5%, 15-year
ID: 2425759 • Letter: P
Question
Please help and show work
Talkington Electronics issues a $366,500, 5%, 15-year mortgage note on December 31, 2016. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of $47,463. Payments are due on December 31.
a. Prepare an installment payments schedule for the first 4 years.
b. Prepare the entries for the (1) the loan and (2) the first installment payment
c. Show how the total mortgage liability should be reported on the balance sheet at December 31, 2017
Explanation / Answer
Year
Beginning Balance
Interest
Total
PMT
End Balance
1
366,500
18,325
384,825
47,463
337,362
2
337,362
16,868
354,230
47,463
306,767
3
306,767
15,338
322,105
47,463
274,642
4
274,642
13,732
288,375
47,463
240,912
5
240,912
12,046
252,957
47,463
205,494
6
205,494
10,275
215,769
47,463
168,306
7
168,306
8,415
176,721
47,463
129,258
Prepare the entries for
(1) the loan
Dr Cash 366,500
Cr Mortgage Payable 366,500
(2) the first installment payment
Dr Mortgage Payable 29,138
Dr Interest Expense 18,325
Cr Cash 47,463
The total liability is $337,362. But there is one payment due within one year. That makes that portion a current liability. dec 17
Long-term liabilities
Mortgage payable . . . . . . . . . . . . . . . 289,899
Current portion of long-term liability . . . 47,463
Year
Beginning Balance
Interest
Total
PMT
End Balance
1
366,500
18,325
384,825
47,463
337,362
2
337,362
16,868
354,230
47,463
306,767
3
306,767
15,338
322,105
47,463
274,642
4
274,642
13,732
288,375
47,463
240,912
5
240,912
12,046
252,957
47,463
205,494
6
205,494
10,275
215,769
47,463
168,306
7
168,306
8,415
176,721
47,463
129,258