It frequently happens that interest on mortgages, already charged, is either reduced or cancelled, and in such cases debit items are brought into the Mortgage Interest Receivable account by the following entry:

Mortgage Interest Receivable ..........................

$......

To Overdue Mortgage Interest Receivable ................................

$......

To cancel (or reduce) interest charged on mortgage No...................... $ ...................

As explained in Section 18, all entries made in the general ledger to the Overdue Mortgage Interest Receivable account should also be posted to the sub-ledgers.

A slight variation from the form of note and coupon in Forms 42, 43 (Section 117) must be made when the principal is divided into a number of equal parts due at equal intervals, each part being represented by a note in which there is included interest computed to the date of that note.

For example, a mortgage is given to secure $3,000, payable in three equal instalments due at intervals of one year, bearing interest at the rate of 6% per annum. The notes -maturing, respectively, one, two, and three years from date - are as follows:

$1,000

+

interest

on

$3,000

for

1

year

=

$1,180

1,000

+

"

"

2,000

"

1

"

=

1,120

1,000

+

"

"

1,000

"

1

"

=

1,060

$3,360

The foregoing indicates the method of entering such notes, care being taken to set forth the fact that $3,000 is principal and $360 is interest.