Question 1

Suminski Flooring Company buys a building for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11% annual interest.The payment will be made in equal monthly installments of $809.Prepare the journal entry for the first monthly payment.(Round your answers to the nearest whole dollar number. )

Accepted Answer

The answer of Suminski Flooring Company buys a building for...

Question 2

On January 1,2016,Brubeck Company purchased equipment and signed a six-year mortgage note for $160,000 at 15%.The note will be paid in equal annual installments of $42,278,beginning January 1,2017.Calculate the balance of Mortgage Payable after the payment of the first installment.(Round your answer to the nearest whole number. )

Accepted Answer

11ea86d6_83ea_8796_92b6_c58854e2f0c2_TB2804_00

Question 3

Installment payments for mortgages generally contain both an amount for principal repayment and an amount for interest.

Accepted Answer

Installment payments for mortgages typically include both a portion for reducing the principal balance of the loan and a portion for paying the interest that is due based on the outstanding balance. This is how borrowers gradually pay off their mortgage over time.

Question 4

On April 1,2017,Ardos Gardening Products borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on April 1 of each subsequent year.Prepare the journal entry for the issuance of the note.

Accepted Answer

The answer of On April 1,2017,Ardos Gardening Products borrowed $100,000...

Question 5

The difference between mortgages payable and notes payable is that notes payable are always secured by specific assets.

Accepted Answer

Notes payable may or may not be secured by specific assets. Mortgages payable, on the other hand, are always secured by a specific property.

Question 6

On January 1,2016,Belden,Inc.issued long-term notes payable for $50,000.The note will be paid over 10 years with payments of $5,000 plus 12% interest due each January 1,beginning January 1,2017.Prepare the amortization schedule for the first three payments.

Accepted Answer

The answer of On January 1,2016,Belden,Inc.issued long-term notes payable for...

Question 7

Bonds are short-term debt issued to multiple lenders called bondholders,usually in increments of $1,000 per bond.

Accepted Answer

Bonds can be short-term or long-term debt instruments issued by corporations, governments, and other entities to raise funds. They are not exclusively short-term.

Question 8

On April 1,2017,Nurix Manufacturers purchases equipment for $100,000,paying $30,000 in cash and signing a 10-year mortgage for $70,000 at 8% annual interest.Prepare the journal entry to record the acquisition of the equipment.

Accepted Answer

The answer of On April 1,2017,Nurix Manufacturers purchases equipment for...

Question 9

On January 1,2017,Sullivan Cabinetry Company purchases $300,000 of property by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.Sullivan will make yearly payments of $46,072.Prepare the amortization schedule for the first five payments.(Round your answers to the nearest dollar. )

Accepted Answer

The answer of On January 1,2017,Sullivan Cabinetry Company purchases $300,000...

Question 10

Hernandez Carpets Company buys a building for $115,000,paying $30,000 cash and signing a 30-year mortgage note for $85,000 at 11%.Prepare the journal entry for the purchase.

Accepted Answer

The answer of Hernandez Carpets Company buys a building for...

Question 11

On January 1,2016,Belden,Inc.issued long-term notes payable for $50,000.The note will be paid over 10 years with payments of $5,000 plus 12% interest due each January 1,beginning January 1,2017.The amortization schedule for the first three payments is provided.Prepare the journal entry for the issuance of the note and for the January 1,2018 note payment.
 $$\begin{array} { | l | r | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Beginning } \
\text { Balance }
\end{array} & \begin{array} { c } 
\text { Principal } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Ending } \
\text { Balance }
\end{array} \
\hline 01 / 01 / 2016 & & & & & \$ 50,000 \
\hline 01 / 01 / 2017 & \$ 50,000 & \$ 5,000 & \$ 6,000 & \$ 11,000 & 45,000 \
\hline01 / 01 / 2018 & 45,000 & 5,000 & 5,400 & 10,400 & 40,000 \
\hline 01 / 01 / 2019 & 40,000 & 5,000 & 4,800 & 9,800 & 35,000 \
\hline
\end{array}$$

Accepted Answer

The answer of On January 1,2016,Belden,Inc.issued long-term notes payable for...

Question 12

On January 1,2017,Gaskin Cabinetry Company purchases $300,000 of equipment by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.Gaskin will make yearly payments of $46,072.The amortization schedule for the first five payments is provided.
 $$\begin{array} { | l | r | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Beginning } \
\text { Balance }
\end{array} & \begin{array} { c } 
\text { Principal } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Ending } \
\text { Balance }
\end{array} \
\hline 01 / 01 / 2017 & & & & & \$ 250,000 \
\hline 01 / 01 / 2018 & \$ 250,000 & \$ 13,572 & \$ 32,500 & \$ 46,072 & 236,428 \
\hline 01 / 01 / 2019 & 236,428 & 15,336 & 30,736 & 46,072 & 221,092 \
\hline0 1 / 01 / 2020 & 221,092 & 17,330 & 28,742 & 46,072 & 203,762 \
\hline 01 / 01 / 2021 & 203,762 & 19,583 & 26,489 & 46,072 & 184,179 \
\hline 01 / 01 / 2022 & 184,179 & 22,129 & 23,943 & 46,072 & 162,050 \
\hline
\end{array}$$ Prepare the journal entry for the purchase of the equipment and for the January 1,2018 mortgage payment.

Accepted Answer

The answer of On January 1,2017,Gaskin Cabinetry Company purchases $300,000...

Question 13

On the maturity date,the bondholder is paid the face amount of the bond plus the last interest payment.

Accepted Answer

This is true. Bondholders receive the face value of the bond and the last interest payment on the maturity date.

Question 14

On January 1,2016,Alldredge Company purchased equipment and signed a six-year mortgage note for $186,000 at 15%.The note will be paid in equal annual installments of $49,148,beginning January 1,2017.Calculate the portion of interest expense paid on the third installment.(Round your answer to the nearest whole number. )

Accepted Answer

11ea86d6_83ea_aea7_92b6_f97885e6b8df_TB2804_00

Question 15

On January 1,2017,Shea Landscaping borrowed $100,000 on a 15%,10-year note with annual installment payments of $10,000 plus interest due on December 31 of each year.Prepare the journal entry for the first installment payment made on December 31,2017.

Accepted Answer

The answer of On January 1,2017,Shea Landscaping borrowed $100,000 on...

Question 16

A mortgage payable is a long-term debt that is backed with a security interest in specific property.

Accepted Answer

A mortgage payable is a type of loan that is secured by a property, typically a house or other real estate. The lender holds a security interest in the property until the loan is paid off, which can take many years. This makes it a long-term debt.

Question 17

On January 1,2016,Bratios Company purchased equipment and signed a six-year mortgage note for $97,000 at 15%.The note will be paid in equal annual installments of $25,631,beginning January 1,2017.On January 1,2017,the journal entry to record the first installment payment will include a ________.(Round your answer to the nearest whole number. )

Accepted Answer

11ea86d6_83ea_6085_92b6_d3532a563230_TB2804_00

Question 18

On January 1,2016,Demarest Company purchased equipment and signed a six-year mortgage note for$80,000 at 15%.The note will be paid in equal annual installments of $21,139,beginning January 1,2017.Calculate the portion of principal amount paid on the third installment.(Round your answer to the nearest whole number. )

Accepted Answer

11ea86d6_83ea_aea8_92b6_8fa01e9923af_TB2804_00

Question 19

On December 31,2016,Thompson Hardware Company purchases $300,000 of property by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.The amortization schedule shows that the company will pay $46,072 per year.Journalize the first yearly payment on December 31,2017.

Accepted Answer

The answer of On December 31,2016,Thompson Hardware Company purchases $300,000...

Question 20

On January 1,2017,Anderson Tools Company purchases machinery with a fair value of $300,000 by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the balance.Prepare the journal entry for January 1,2017.

Accepted Answer

The answer of On January 1,2017,Anderson Tools Company purchases machinery...

Quiz 12: Long-Term Liabilities