ullumber Company receives $385,000 when it issues a $385,000, 5%, mortgage note

Question

ullumber Company receives $385,000 when it issues a $385,000, 5%, mortgage note payable to finance the construction of a building at December 31, 2017. The terms provide for annual installment payments of $37,092 on December 31. Prepare the schedule using effective-interest method to amortize bond premium or discount of Cullumber Company. (Round answers to 0 decimal places, e.g. 5,275.) Annual Interest Reductionn of Principal Principal Balance Cash PeriodPaymen Interest Expense Issue date 12/31/18 12/31/19 Prepare the journal entry to record the mortgage loan. (Round answers to O decimal places, e.g. 5,275 Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Prepare the journal entries to record the first two installment payments. (Round answers to 0 decimal places, e.g. 5,27S. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit First Installment Payment Dec. 31, 2018 Dec. 31, 2019 Type here to search

Explanation / Answer

Year Cash payment Interest expense Principle reduction Princpal balance issue date 0.00 0.00 0.00 385,000.00 12/31/2018 37,092.00 19,250.00 17,842.00 367,158.00 12/31/2019 37,092.00 18,357.90 18,734.10 348,423.90 Date General journal Debit Credit Dec31.2017 Cash              385,000 Mortagage Note payable              385,000 [ Entry to record note payable] Dec.31 2018 Interest expense 19250 Mortagage Note payable 17842 Cash 37092 Dec.31 2019 Interest expense 18,357.90 Mortagage Note payable 18,734.10 Cash 37092

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