Mortgages Payable – Ford Online Accounting Manual

Liabilities and Net Worth

MORTGAGES PAYABLE	LIABILITY ACCOUNT
	2500

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Principal amount due to finance institutions on long term loans secured by mortgages of land contracts on real property used in the automobile business.

TRANSACTIONS

			Jrnl.	Dr.	Cr.

Land and building purchased (portion secured by mortgage and balance paid by check)			CD
	Land (Auto Business Only)			1700
	Buildings & Improvements (Auto Business Only)			1710
		Mortgages Payable			2500
		Cash in Bank—General			1001

Payment of monthly installment on mortgage with interest			CD
	Mortgages Payable			2500
	Interest—Mortgage			8320
		Cash in Bank			1001

COMMENTS

Subsidiary records should support this account.
Interest not paid on a monthly basis on mortgages payable should be accrued monthly as a debit to Account 8320, Interest—Mortgage, and a credit to Account 2421, Accrued Interest.
The portion of the mortgage or land contract payable within twelve months should be recorded in Account 2040, Notes Payable—Long Term—Current Portion. Payments of principal amounts of mortgages payable should be charged to Account 2500 until the long term portion has been paid.