On January 1,2011,Alpha Enterprise signed a $100,000,6%,20-year mortgage note to buy a new warehouse.The mortgage will be repaid in a series of twenty equal annual installment payments.Over the 20-year period,as each installment payment is made,the amount that Alpha Enterprise will show on its balance sheet for mortgage payable will ________.
A)increase
B)decrease
C)stay the same
D)The answer cannot be determined from the information given.

Question

Quizplus · Accepted Answer

As each equal annual installment payment is made, the mortgage payable balance will decrease until it reaches zero at the end of the 20-year period. Therefore, the amount that Alpha Enterprise will show on its balance sheet for mortgage payable will decrease.

On January 1,2011,Alpha Enterprise Signed a $100,000,6%,20-Year Mortgage Note to Buy