Question

On June 30, Collins Management Company purchased land for $480,000 and a building for $720,000, paying $600,000 cash and issuing a 9% note for the balance, secured by a mortgage on the property. The terms of the note provide for 20 semiannual payments of $30,000 on the principal plus the interest accrued from the date of the preceding payment. If an amount box does not require an entry, leave it blank. a. Journalize the entry to record the transaction on June 30. June 30 Building Land Notes Payable Cash b. Journalize the entry to record the payment of the first installment on December 31. Dec. 31 Notes Payable Interest Expense Cash c. Journalize the entry to record the payment of the second installment the following June 30. June 30 Notes Payable June 30 Notes Payable L L Interest Expense Cash

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer Parta) Jun.30 $ $ 720,000 480,000 Building Land Notes Payable Cash 600,000 600,000 $ e Part b) 0 Dec. 31 Notes Payable Interest expense (600000*9%/2) Cash 30,000 27,000 S $ 57,000 3 4 Part ) 5 June. 30 Notes Payable Interest expense (600000-30000) *9%/2) Cash $ $ 30,000 25,650 $ 55,650 8 9 For any help please comment in the comment box