(a)
Liabilities
Liabilities are an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liabilities or a non-current liabilities depending upon the time period in which it is paid.
Mortgage note payable
Mortgage note payable is a long term note secured by a loan, which pledges title to particular assets as a security for the loan. The company has to pay the mortgage with interest.
To Prepare: The installment payment schedule for the first three payments of notes payable.
(b)
To Prepare: The
(c)
To Prepare: The balance sheet presentation of mortgage payable for December 31, 2017.
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- Michael purchased a new piece of equipment to be used in its new facility. The $380,000 piece of equipment was purchased with a $57,000 down payment and with cash received through the issuance of a $323,000, 8%, 5-year mortgage payable issued on January 1, 2022. The terms provide for annual installment payments of $80,897 on December 31. Principal Reduction Year Period 1 2 January 1, 2022 Year 2022 Year 2023 Cash Paid 80,897 80,897 Interest Expense (8% Interest Rate) Note Payable Balance 323,000 Fill in the necessary blanks in the amortization table for YEARS 2022 and 2023. Do NOT use dollar signs or commas in your answer. (Round answers to 0 decimal places, e.g. 125.)arrow_forwardOn January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, Jalen plans to make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. The payments include interest at a rate of 6%. Required: 1. Record the purchase of land when the note is issued. 2. Record the first installment payment on June 30, 2021, and the second installment payment on December 31, 2021. 3. Calculate the balance of Notes Payable and Interest Expense on December 31, 2021.arrow_forwardAmerican Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton andBarton completed construction of the machine on January 1, 2018. In payment for the $4 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year.The payments include interest at the rate of 10%.Required:1. Prepare the journal entry for American Food Services’ purchase of the machine on January 1, 2018.2. Prepare an amortization schedule for the four-year term of the installment note.3. Prepare the journal entry for the first installment payment on December 31, 2018.4. Prepare the journal entry for the third installment payment on December 31, 2020arrow_forward
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- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College