Kinyae Electronics issues a $600,000, 10-year, 9% mortgage note payable on December 31, 2024, to help finance
Question:
Kinyae Electronics issues a $600,000, 10-year, 9% mortgage note payable on December 31, 2024, to help finance a plant expansion. The terms of the note provide for semi-annual blended payments of $46,126. Payments are due on June 30 and December 31. Kinyae Electronics’ year end is December 31.
Instructions
a. Prepare an instalment payment schedule for the first four years. Round all calculations to the nearest dollar.
b. Record the issue of the mortgage note payable on December 31, 2024.
c. Show how the mortgage liability should be reported on the balance sheet at December 31, 2024.
d. Record the first two instalment payments on June 30, 2025, and December 31, 2025.
Indicate the advantages and disadvantages of making fixed principal payments versus blended payments.
Step by Step Answer:
Accounting Principles Volume 2
ISBN: 9781119786634
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak