- Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2007. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semi-annual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.
- Complete the installment payments schedule for the first 2 years (Round answers to 0 decimal places, e.g. 125. Use rounded amounts for future calculations.)
- Prepare the entries for (1) the loan and (2) the first two installment payments. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3,
- Show how the total mortgage liability should be reported on the balance sheet at December 31, 2008.
2. On July 1, 2011, Atwater Corporation issued $2,000,000 face value, 10%, 10-year bonds at $2,271,813.This price resulted in an effective-interest rate of 8% on the bonds. Atwater uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.
Round all computations to the nearest dollar
- Prepare the journal entry to record the issuance of the bonds on July 1, 2011.
- Prepare an amortization table through December 31, 2012 (3 interest periods) for this bond issue.
- Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2011.
- Prepare the journal entry to record the payment of interest and the amortization of the premium on July 1, 2012, assuming no accrual of interest on June 30.
- Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2012.