Bonnie's Family is a non-profit organization which assists families with low-income, special needs children, or are...

 

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Bonnie's Family is a non-profit organization which assists families with low-income, special needs children, or are victims of domestic violence. They have a 30 year mortgage with a 5% interest rate which requires a payment of $3,000 per month. In preparing the financial statements for the board, you list the mortgage balance of $287,000 as a current liability based on the board hoping to pay it off within the next year. If Bonnie's pays according to the mortgage agreement, only $20,000 will be paid in the next year. The board asks an independent CPA to advise how to report the mortgage on the balance sheet. 1. Explain how to account for the mortgage payment based on U.S. GAAP, assuming the board feels they will pay the entire balance in the next year. 2. Provide supporting information to the accounting for the mortgage on the balance sheet for your response to requirement 1. Bonnie's Family is a non-profit organization which assists families with low-income, special needs children, or are victims of domestic violence. They have a 30 year mortgage with a 5% interest rate which requires a payment of $3,000 per month. In preparing the financial statements for the board, you list the mortgage balance of $287,000 as a current liability based on the board hoping to pay it off within the next year. If Bonnie's pays according to the mortgage agreement, only $20,000 will be paid in the next year. The board asks an independent CPA to advise how to report the mortgage on the balance sheet. 1. Explain how to account for the mortgage payment based on U.S. GAAP, assuming the board feels they will pay the entire balance in the next year. 2. Provide supporting information to the accounting for the mortgage on the balance sheet for your response to requirement 1.

Answer rating: 100% (QA)

Answer As per the principal on a loan due next twelve months as on the Balance sheet date will b... View the full answer