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ACC 291 WileyPLUS Week 3 Assignment Problem P10-5A

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ACC 291 WileyPLUS Week 3 Assignment Problem P10-5A
Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2010.
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.
Correct.
Complete the installment payments schedule for the first 2 years. (Round answers to 0
decimal places, e.g. 125. Use rounded amounts for future calculations.)
Semiannual
Interest
Period Cash Payment Interest Expense
Reduction
of Principal Principal Balance
Issue Date $ 400000
1 29433 $ 16000 13433 386567
2 29433 15463 13970 372597
3 29433 14904 14529 358068
4 29433 14323 15110 342958
Correct.
Prepare the entries for (1) the loan and (2) the first two installment payments. (For multiple
debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answer to 0
decimal places, e.g. 125.)
Date Account/Description Debit Credit
2010
Dec. 31 Cash 400000
Mortgage notes payable 400000
2011
June 30 Interest expense 16000
Mortgage notes payable 13433
Cash 29433

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Dec. 31 Interest expense 15463
Mortgage notes payable 13970
Cash 29433
Correct.
Show how the total mortgage liability should be reported on the balance sheet at December 31,
2011. (Round answer to 0 decimal places, e.g. 125.)
Current liabilities 12/31/11
Current portion of mortgage notes payable 29639
Long-term liabilities
Mortgage notes payable, due 2020 342958
Current liabilities 12/31/11
Current portion of mortgage notes payable * $29,639
Long-term liabilities
Mortgage notes payable, due 2020 ** $342,958
* ($14,529 + $15,110)
** ($372,597 - $14,529 - $15,110)

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