# 30 54270 credit 54270 cash 24946000 10 31 04 debit

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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...
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## 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.

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