30 54270 credit 54270 cash 24946000 10 31 04 debit

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Payment Interest Reduction of Principal 09-01-04 Loan Balance Debt Financing – Module 2 Date 09/30 1,790.00 1,250.00 540.00 1,790.00 1,247.30 542.70 Credit $ 542.70 Cash 249,460.00 10-31-04 Debit $1,247.30 Mortgage Payable 250,000.00 09-30-04 Account Interest Expense $1,790.00 248,917.30 To record first mortgage payment Question: Interest at 10-31-04 = $249,460 x .06 x 1/12 How does the above transaction impact the three major financial statements? Reduction of Principal at 10-31-04 = $1,790.00 - $1,247.30 Debt Financing – Module 2 Debt Financing – Module 2 Income Statement Impact Expenses (interest expense) are increased by $1,247.30 thus causing net income to be decreased by $1,247.30. Reduction of Principal Loan Balance Decrease assets (cash) by $1,790.00; decrease liabilities (mortgage payable) by $542.70; and decrease equity (retained earnings) by $1,247.30. Cash Flow Impact $1,247.30 is an operating cash outflow (interest payment) and $542.70 is a financing cash outflow (payment of principal of loans). Payment Interest 09-30-04 1,790.00 1,250.00 540.00 249,460.00 10-31-04 1,790.00 1,247.30 542.70 248,917.30 11-30-04 1,790.00 1,244.59 545.41 248,371.89 12-31-04 1,790.00 1,241.86 548.14 247,823.75 Totals Balance Sheet Impact Date 7,160.00 4,983.75 2,176.25 09-01-04 250,000.00 Debt Financing (DF) – Module 2 Pg 2...
View Full Document

This note was uploaded on 01/19/2014 for the course ACCTMIS 2200 taught by Professor Smith during the Spring '12 term at Ohio State.

Ask a homework question - tutors are online