Examples of mortgage notes payable in the following topics:
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- A note payable is a liability where one party makes an unconditional written promise to pay a specific sum of money to another.
- Negotiable promissory notes are used extensively in combination with mortgages in the financing of real estate transactions.
- When a note is signed and it becomes a binding agreement, a notes payable can be recorded to report the debt on the balance sheet.
- The note payable amount can include the principal as well as the interest payment amounts due.
- If periodic payments are made throughout the term of the note, the payments will reduce the notes payable balance.
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- Accounts payable are typically due within 30 days.
- Amounts listed on a balance sheet as accounts payable represent all bills payable to vendors of a company, whether or not the bills are more or less than 30 days old.
- Therefore, late payments are not disclosed on the balance sheet for accounts payable.
- An aging schedule showing the amount of time certain amounts are past due may be presented in the notes to audited financial statements; however, this is not common accounting practice.
- Long-term liabilities can include bonds, mortgages, and loans that are payable over a term exceeding one year.
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- Long-term liabilities are liabilities with a due date that extends over one year, such as a notes payable that matures in 2 years.
- Examples of long-term liabilities are debentures, bonds, mortgage loans and other bank loans (it should be noted that not all bank loans are long term since not all are paid over a period greater than one year. ) Also long-term liabilities are a way for a company to show the existence of debt that can be paid in a time period longer than one year, a sign that the company is able to obtain long-term financing .
- For example, a loan for which two payments of USD 1,000 are due--one in the next 12 months and the other after that date--would be split into one USD 1000 portion of the debt classified as a current liability, and the other USD 1000 as a long-term liability (note this example does not take into account any interest or discounting effects, which may be required depending on the accounting rules that may apply).
- If the current liability section already has an accounts payable account (balance which is usually paid off in 30 days), the current portion of the loan payable (due within 12 months) would be listed after accounts payable.
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- Examples of current liabilities include wages, taxes, accounts payables, and short-term obligations (such as purchase from suppliers).
- Any type of borrowing from persons or banks for improving a business or personal income that is payable during short or long time
- Examples of types of liabilities include money owing on a loan, money owing on a mortgage, or an IOU.
- They usually include payables such as wages, accounts, taxes, and accounts payables, unearned revenue when adjusting entries, portions of long-term bonds to be paid this year, short-term obligations (e.g., from purchase of equipment).
- They usually include issued long-term bonds, notes payables, long-term leases, pension obligations, and long-term product warranties.
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- A personal balance sheet lists current assets, such as cash in checking accounts and savings accounts; long-term assets, such as common stock and real estate; current liabilities, such as loan debt and mortgage debt due; or long-term liabilities, such as mortgage and other loan debt.
- A small business balance sheet lists current assets, such as cash, accounts receivable and inventory; fixed assets, such as land, buildings, and equipment; intangible assets, such as patents; and liabilities, such as accounts payable, accrued expenses, and long-term debt.
- Contingent liabilities, such as warranties, are noted in the footnotes to the balance sheet.
- Financial liabilities (excluding provisions and accounts payable), such as promissory notes and corporate bonds.
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- On issuance, the journal entry to record the bond is a debit to cash and a credit to bonds payable.
- Bonds differ from notes payable because a note payable represents an amount payable to only one lender, while multiple bonds are issued to different lenders at the same time.
- On issuance, the journal entry to record the bond is a debit to cash and a credit to bonds payable.
- Other journal entries associated with bonds is the accounting for interest each period that interest is payable.
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- Three common examples of long term loans are government debt, mortgages, and debentures (bonds).
- A mortgage is a loan secured by real property.
- It requires a mortgage note affirming the existence of the loan and the encumbrance of the realty through the granting of a mortgage securing the loan.
- Many types of mortgages are used worldwide, though several characteristics, subject to local regulations and legal requirements, define most mortgages:
- In some countries, the term is used interchangeably with bond, loan stock, or note.
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- Example of current liabilities include accounts payable, short-term notes payable, commercial paper, trade notes payable, and other liabilities incurred in the normal operations of the business.
- Some of these normal operating costs include salaries payable, wages payable, interest payable, income tax payable, and the current balance of a long-term debt that will be due within a single year.
- These usually include issued long-term bonds, notes payables, long-term leases, pension obligations, and long-term product warranties.
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- Note that Valley does not need adjusting entries because the interest payment date falls on the last day of the accounting period.
- The income statement for each of the 10 years (2010-2018) would show Bond Interest Expense of USD 12,000 (USD 6,000 X 2); the balance sheet at the end of each of the years (2010-2018) would report bonds payable of USD 100,000 in long-term liabilities.
- The firm would report the USD 2,000 Bond Interest Payable as a current liability on the December 31 balance sheet for each year.