Otto Electronics issues an $800,000, 8%, 10-year mortgage note on December 31, 2006, to help finance a plant expansion program. The terms provide for semiannual installment payments, not including real estate taxes and insurance of $58,865. Payments are due June 30 and December 31.
Instructions:
a.) Prepare an installment payment schedule for the first 2 years.
b.) Prepare the entries for (1) the mortgage loan and (2) the first two installment payments. (June 30 Mortgage Notes Payable $26, 865)
c.) Show how the total mortgage liability should be reported on the balance sheet at December 31, 2007. (Current Liability - 2007: $59, 276)