Talkington Electronics issues a $362,000, 10%, 10-year mortgage note on December

Question

Talkington Electronics issues a $362,000, 10%, 10-year mortgage note on December 31, 2013. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,048. Payments are due June 30 and December 31.

Semiannual Interest Period

Cash Payment

Interest Expense

Reduction of Principal

Principal Balance

Issue Date

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2013

June 30, 2014

Dec. 31, 2014

Talkington Electronics
Balance Sheet
December 31, 2014

Talkington Electronics issues a $362,000, 10%, 10-year mortgage note on December 31, 2013. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,048. Payments are due June 30 and December 31.

Explanation / Answer

1)

2)

3)

Semiannual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue Date 362000 1 29048 18100 10948 351052 2 29048 17553 11495 339557 3 29048 16978 12070 327487 4 29048 16374 12674 314813

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