Weygandt, Accounting Principles, 12e
Chapter Fifteen
Solutions to Challenge Exercises
Challenge Exercise 15-1 – Solution
2017
(a) Jan. 1 Interest Payable ………………………………………………. 216,000
Cash ……………………………………………………… 216,000
Challenge Exercise 15-2 – Solution
(a) 2017 – Issuance of Note
Dec. 31 Cash …………………………………………………………………….. 400,000
Mortgage Payable …………………………………………… 400,000
2018 – First Installment Payment
Dec. 31 Interest Expense ……………………………………………………… 40,000
2019 – Second Installment Payment
Dec. 31 Interest Expense ……………………………………………………… 37,500
(b) The portion of the mortgage payable in the next 12 months would be reported as a current liability:
$65,000 – {[$400,000 – ($25,000 + $27,500)] X 10%} ……………………. $30,250