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Otto Electronics issues an $800,000, 8%, 10-year mortgage note on December 31, 2006, to help finance a plant expansion program. The terms provide for semiannual installment payments, not including real estate taxes and insurance of $58,865. Payments are due June 30 and December 31.

Instructions:

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

b.) Prepare the entries for (1) the mortgage loan and (2) the first two installment payments. (June 30 Mortgage Notes Payable $26, 865)

c.) Show how the total mortgage liability should be reported on the balance sheet at December 31, 2007. (Current Liability - 2007: $59, 276)

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M991891

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