[accttutor18]

TPo1 Company borrowed $300,000 on January 1, 2008, by issuing a $300,000, 8% mortgage note payable. The terms call for semiannual installment payments of $20,000 on June 30 and December 31. How do I do the Dec 31 JE? I got Jan1 and June 30 correct. For June 30, I did 300000/4%=12000. How do I do the second installment for Dec. Also, how do I calculate the current liability below?


Incorrect.

Prepare the journal entries to record the mortgage loan and the first two installment payments. (List multiple debit/credit entries in descending order of amount.)
Date Description/Account Debit Credit

Jan. 1 Cash 300000
Mortgage notes payable 300000

June 30 Interest expense 12000
Mortgage notes payable 8000
Cash 20000

Dec. 31 Interest expense
Mortgage notes payable
Cash 20000


Indicate the amount of mortgage note payable to be reported as a current liability and as a long-term liability at December 31, 2008. (Round computations and final answer to 0 decimal places.)
Current Liabilities $
Long-term liabilities $

[morgaine300]

When the payment on June 30 was made, $8000 of it went towards the principal, thereby reducing it. So for the second half of the year, you have less principal and have to re-figure the new interest amount based on that.

The current liability is the portion due within one year, i.e. the principal that will be paid on the next two payments, so you'd need to figure those out too.