Talkington Electronics issues a $400,000, 8%, 10-year mortgage note on December

Question

Talkington Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2018. The proceeds from the note are to be used in financing a new research terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of $59,612. Payments are due on December 31. laboratory. The Prepare an installment payments schedule for the first 4 years. (Round answers to o decienal places, e-g. 15,250.) Annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue Date Prepare the entries for (1) the loan and (2) the first installment payment.(Credit account titles are automatically indented when amount is entered. Do not indent mmanually, Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

Interest = $400000 x 8% = $32000

Reduction of principal = $59612 - $32000 = $27612

Principal balance = $400000 - $27612 = $372388

Annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue Date 400000 1 59612 32000 27612 372388 2 59612 29791 29821 342567 3 59612 27405 32207 310360 4 59612 24829 34783 275577

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