Homework Answers
1)
| Date | Account title | Debit | credit |
| a)Jan 1 2019 | cash | 500000 | |
| Bond payable | 500000 | ||
| b)Dec 31 2019 | Interest expense | 30000 | |
| Interest payable (500000*6%) | 30000 | ||
| c)Jan 1 ,2020 | Interest payable | 30000 | |
| cash |
30000 |
2)
a).
| Date | Account title | Debit | credit |
| Dec 31 2019 | cash | 800000 | |
| Mortgage note payable | 800000 | ||
| Dec 31 2020 | Mortgage note payable | 55224 | |
| Interest expense (800000*8%) | 64000 | ||
| cash | 119224 | ||
| Dec 31 2021 | Mortgage note payable | 59641.92 | |
| Interest expense (744776*.08) | 59582.08 | ||
| cash | 119224 |
**carrying value of mortgage after first installment = 800000-55224 = 744776
**carrying value of mortgage after second installment = 744776-59641.92= 685134.08
b)The amount likely to be payable within one year from reporting period (Dec 31 2021) will be classified as current liability .
Current liability =current portion of mortgage payable next year = 119224 installment -(685134.08*8%)Interest
= 119224- 54810.73
= 64413.27
Non current liability = 685134.08 Total mortgage outstanding - 64413.27 current
= $ 620720.81
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