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Detwiler Orchard issues a $264,948, 5%, 10-year mortgage note to obtain needed financing for a new lab. The terms call for annual payments of $34,312 each. Prepare the entries to record the mortgage loan and the first installment payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit (To record mortgage loan) (To record annual payment on mortgage)

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Answer:

The answer is "[tex]\$ \ 13,247[/tex]"

Explanation:

Title and description of the account                        Debit        Credit

Cash                                                                    [tex]\$ \ 264,948[/tex]

Note payable on mortgage                                                      [tex]\$ \ 264,948[/tex]

(The loan was recorded)  

Note payable on mortgage                                   [tex]\$ \ 21,065[/tex]  

Expenditure on interest                                         [tex]\$ \ 13,247[/tex]  

Cash                                                                                        [tex]34,312[/tex](Annual mortgage record payment)

[tex]\text{First year interest spending = Payable mortgage bill }\times \text{ Rate of interest}[/tex]

                                                 [tex]= \$ 264,948 \times 5 \% \\\\= \$ 13,247[/tex]

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