Preparing Mortgage Amortization Schedule and Journal Entries for a Mortgage Note Payable
Stanley's Electronics issues a $800,000, 8%, 10-year mortgage note on December 31, 2016, to help
finance a plant expansion program. The terms provide for annual installment payments, exclusive of
real estate taxes and insurance, of $119,224. Payments are due on December 31.
Required:
1. Prepare an installment payments schedule for the first 4 years.
2. Prepare the entries for (1) the loan and (2) the first installment payments.
3. Show how the total mortgage liability should be reported on the balance sheet at December 31,
2017.
Issuance Price of Bonds
Patterson Company issued 30-year bonds on June 30. The face value of the bonds was $750,000. The
stated interest rate on the bonds was 6%. The market rate of interest at the time of issuance was 4%.
Patterson also issued another set of bonds on August 31. These bonds were 20-year bonds and had a
face value of $556,000. The stated rate of interest on these bonds was 5%. The market rate of interest
at the time these bonds were issued was 8%. Both sets of bonds pay interest semiannually.
Required:
Calculate the issuance price of these bonds.