00 to record rst mortgage payment question 250000

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Unformatted text preview: Mortgage Payable Debit Credit $1,790.00 To record first mortgage payment Question: = $250,000 x .06 x 1/12 Reduction of Principal at 09-30-05 = $1,790.00 - $1,250.00 Debt Financing – Module 2 Income Statement Impact Expenses (interest expense) are increased by $1,250 thus causing net income to be decreased by $1,250. $1,250.00 $ 540.00 Cash Interest at 09-30-04 How does the above transaction impact the three major financial statements? Balance Sheet Impact Decrease assets (cash) by $1,790; decrease liabilities (mortgage payable) by $540; and decrease equity (retained earnings) by $1,250. Cash Flow Impact $1,250 is an operating cash outflow (interest payment) and $540 is a financing cash outflow (payment of principal of loans). Debt Financing (DF) – Module 2 Pg 1 Debt Financing – Module 2 Date...
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