Exercise 2. Miller Company has a Mortgage Note Payable (Installment Note) of $350,000 on December 31, 20X1. During 20X2, the amount of principle due to be paid on the Mortgage is $33,500. a) What should be the amount shown on the Dec.31, 20X1 Balance Sheet in the Current Liability section for Notes Payable? b) If this is the only note that the company has signed, what should be the amount shown on the Dec.31 Balance Sheet in the Long-Term Liability section for Mortgage Notes Payable?

Excercise 3

Miller Company is evaluating 2 different notes and how they will affect the company. Please fill in the follwing chart.

....................................................................................NOTE...................INTEREST EXPENSE.........................PROCEEDS...................DUE AT MATURITY

a) 800,000 6 month 5% note

b) 800,000 6 month Note Discounted at 5% Note

Which note would you suggest for the Miller Company and WHY?