Question 1

On January 1,2018,Allgood 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 1,2019.Calculate the portion of interest expense paid on the third installment.(Round your answer to the nearest whole number.)
A) $49,148
B) $21,048
C) $27,900
D) $164,752

Accepted Answer

11ea8873_d4e0_cc44_bb89_1d5adb36ceab_TB5026_00

Question 2

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 3

A-Plus 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.Omit explanation.

Accepted Answer

The answer of A-Plus Carpets Company buys a building for...

Question 4

On January 1,2018,Benbrook 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 1,2019.Calculate the balance of Mortgage Payable after the payment of the first installment.(Round your answer to the nearest whole number.)
A) $24,000
B) $117,722
C) $141,722
D) $120,702

Accepted Answer

11ea8873_d4e0_cc43_bb89_5f93d389affd_TB5026_00

Question 5

On January 1,2018,Gadsby 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.Gadsby will make yearly payments of $46,072.The amortization schedule for the first five payments is provided.
 $$\begin{array} { | l | r | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Beginning } \
\text { Balance }
\end{array} & \begin{array} { c } 
\text { Principal } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Ending } \
\text { Balance }
\end{array} \
\hline \mathrm { p } 1 / 01 / 2018 & & & & & \$ 250,000 \
\hline \mathrm { p } 1 / 01 / 2019 & \$ 250,000 & \$ 13,572 & \$ 32,500 & \$ 46,072 & 236,428 \
\hline \mathrm { p } 1 / 01 / 2020 & 236,428 & 15,336 & 30,736 & 46,072 & 221,092 \
\hline \mathrm { p } 1 / 01 / 2021 & 221,092 & 17,330 & 28,742 & 46,072 & 203,762 \
\hline \mathrm { p } 1 / 01 / 2022 & 203,762 & 19,583 & 26,489 & 46,072 & 184,179 \
\hline \mathrm { p } 1 / 01 / 2023 & 184,179 & 22,129 & 23,943 & 46,072 & 162,050 \
\hline
\end{array}$$ Prepare the journal entries for the purchase of the equipment and for the January 1,2019 mortgage payment.Omit explanations.

Accepted Answer

The answer of On January 1,2018,Gadsby Cabinetry Company purchases $300,000...

Question 6

On January 1,2018,Milton 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 1,2018.Omit explanation.

Accepted Answer

The answer of On January 1,2018,Milton Tools Company purchases machinery...

Question 7

On January 1,2018,Sullivan 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 1,2018,Sullivan Company purchases $300,000 of...

Question 8

On January 1,2018,Belview,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 1,2019.The amortization schedule for the first three payments is provided.Prepare the journal entries for the issuance of the note and for the January 1,2020 note payment.Omit explanation.
 $$\begin{array} { | l | r | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Beginning } \
\text { Balance }
\end{array} & \begin{array} { c } 
\text { Principal } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Payment }
\end{array} & \begin{array} { c } 
\text { Ending } \
\text { Balance }
\end{array} \
\hline \mathrm { p } 1 / 01 / 2018 & & & & & \$ 50,000 \
\hline \mathrm { p } 1 / 01 / 2019 & \$ 50,000 & \$ 5,000 & \$ 6,000 & \$ 11,000 & 45,000 \
\hline \mathrm { p } 1 / 01 / 2020 & 45,000 & 5,000 & 5,400 & 10,400 & 40,000 \
\hline \mathrm { p } 1 / 01 / 2021 & 40,000 & 5,000 & 4,800 & 9,800 & 35,000 \
\hline
\end{array}$$

Accepted Answer

The answer of On January 1,2018,Belview,Inc.issued long-term notes payable for...

Question 9

On December 31,2018,Anderson 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 31,2019.Omit explanation.

Accepted Answer

The answer of On December 31,2018,Anderson Hardware Company purchases $300,000...

Question 10

Hardwood 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 payments 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.)Omit explanation.

Accepted Answer

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

Question 11

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

Accepted Answer

Mortgages payable are a type of long-term notes payable that are secured with specific assets.

Question 12

On January 1,2018,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 1,2019.Prepare the amortization schedule for the first three payments.

Accepted Answer

The answer of On January 1,2018,Belden,Inc.issued long-term notes payable for...

Question 13

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

Accepted Answer

This is correct. A mortgage payable is a type of long-term debt that is secured by a security interest in a specific property, usually the property being purchased with the loan. This means that if the borrower defaults on the loan, the lender has the right to foreclose on the property and sell it to recoup their losses.

Question 14

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 an amount for paying off the principal balance of the loan and an amount for paying interest on the outstanding balance.

Question 15

On January 1,2018,Shade 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 31,2018.Omit explanation.

Accepted Answer

The answer of On January 1,2018,Shade Landscaping borrowed $100,000 on...

Question 16

On January 1,2018,Earnest 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 1,2019.Calculate the portion of principal paid on the third installment.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)
A) $12,086
B) $12,000
C) $21,139
D) $9053

Accepted Answer

11ea8873_d4e0_f355_bb89_d79a4c0d52dd_TB5026_00

Question 17

On January 1,2018,Brazos 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 1,2019.On January 1,2019,the journal entry to record the first installment payment will include a ________.(Round your answer to the nearest whole number.)
A) debit to Mortgage Payable for $25,631
B) debit to Interest Expense for $14,550
C) credit to Cash for $11,081
D) credit to Mortgage Payable for $97,000

Accepted Answer

11ea8873_d4e0_a532_bb89_0d3053e67756_TB5026_00

Question 18

On April 1,201,Arbor 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.Omit explanation.

Accepted Answer

The answer of On April 1,201,Arbor Gardening Products borrowed $100,000...

Question 19

Long-term liabilities can be structured either with an equal principal payment or with an equal total payment.

Accepted Answer

Long-term liabilities, such as loans, can be structured to have either an equal principal payment plan, where the principal amount paid is the same every period but the total payment decreases over time as interest decreases, or an equal total payment plan (amortization), where the total payment (principal plus interest) remains constant over the life of the loan, with the proportion of interest decreasing and the proportion of principal increasing over time.

Question 20

On April 1,2018,Nunez 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.Omit explanation.

Accepted Answer

The answer of On April 1,2018,Nunez Manufacturers purchases equipment for...

Quiz 14: Long-Term Liabilities