Question 1

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 2

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 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

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 5

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 6

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 7

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

Accepted Answer

Long-term liabilities can indeed be structured with either an equal principal payment or an equal total payment. In the case of an equal principal payment structure, the borrower pays the same amount towards the principal of the loan each period, while the interest payment decreases as the outstanding principal balance decreases. In an equal total payment structure, the borrower makes equal payments each period that include both principal and interest, with the amount of interest decreasing as the outstanding principal balance decreases.

Question 8

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

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Question 9

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 10

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

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Question 11

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 long-term debt that is secured by a property, meaning if the borrower defaults on the loan, the lender can seize and sell the property to recover their money.

Question 12

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

Accepted Answer

This statement is true. Installment payments for mortgages usually include both an amount for repaying the principal amount borrowed and an amount for the interest accrued on the loan. The proportion of principal and interest in each payment may vary over the life of the mortgage as the outstanding balance reduces.

Question 13

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

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Question 14

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...

Question 15

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

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Question 16

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.

Accepted Answer

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

Question 17

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 18

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 19

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, and they are issued to bondholders typically in increments of $1,000 per bond, but their defining characteristic is not their short-term nature.

Question 20

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.
  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...

Quiz 14: Long-Term Liabilities