Question

Sheridan Company receives $276,000 when it issues a $276,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2022. The terms provide for annual installment payments of $46,000 on December 31. Prepare an amortization schedule of a mortgage note for two years. Annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue date $ 12/31/23 12/31/24 Prepare the journal entry to record the mortgage loan. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 Prepare the journal entries to record the first two installment payments. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Debit Credit Account Titles and Explanation First Installment Payment Dec. 31, 2023 Second Installment Payment Dec. 31, 2024

Answer 1

Answers

• Requirements

[1]

Annual Interest Period	Cash Payments	Interest Expense	Reduction of Principal	Principal balance
	[A]	[B = Last 'D' x 10%]	[C = A - B]	[D = D -C]
issue date				$276,000
31-Dec-23	$46,000	$27,600	$18,400	$257,600
31-Dec-24	$46,000	$25,760	$20,240	$237,360

[2]

Date	Accounts title	Debit	Credit
31-Dec-22	Cash	$276,000
	Mortgage Note Payable		$276,000
	(to record issuance)
31-Dec-23	Interest Expense	$27,600
	Mortgage Note Payable	$18,400
	Cash		$46,000
	(#1 Installment)
31-Dec-24	Interest Expense	$25,760
	Mortgage Note Payable	$20,240
	Cash		$46,000
	(#2 Installment)