On November 1, 2012, Nydegger Company arranges with an insurance company to borrow $400,000 on a 30-year
Question:
On November 1, 2012, Nydegger Company arranges with an insurance company to borrow $400,000 on a 30-year mortgage to purchase land and a building to be used in its operations. The land and the building are pledged as collateral for the loan, which has an annual interest rate of 12%, compounded monthly. The monthly payments of $4,114 are made at the end of each month, beginning on November 30, 2012.
Required:
1. Prepare the journal entry to record the purchase of the land and building, assuming that
$75,000 of the purchase price is assignable to the land.
2. Prepare the journal entries on November 30 and December 31 for the monthly payments on the mortgage.
3. Interpretive Question: Explain generally how the remaining liability at December 31, 2012, will be reported on the company’s balance sheet dated December 31, 2012.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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1 2012 Nov 1 Land 75000 Building 325000 Mortgage Payable 400000 Purchased land and building on a 30y...View the full answer
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Related Book For 
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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