Question

Ethel Company purchased a building with a market value of $320,000 and land with a market value of $60,000 on January 1, 2018. Ethel Company paid $40,000 cash and signed a 12-year, 18% mortgage payable for the balance. Requirements 1. Journalize the January 1, 2018, purchase. 2. Journalize the first monthly payment of $5,777 on January 31, 2018. (Round to the nearest dollar.) Requirement 1. Journalize the January 1, 2018, purchase. (Record debits first, then credits. Select explanations on the last line of the journal entry.) Date Accounts and Explanations Debit Credit 2018 Jan. 1 Requirement 2. Journalize the first monthly payment of $5,777 on January 31, 2018. (Round to the nearest dollar.) (Record debits first, then credits. Select explanations on the last line of the journal entry.)

Answer 1

C D 1 Α 1 1) 2 Date Jan, 1 minor Particulars Building Land Mortgages payable Debit($) Crdit($) 320000 60000 340000 40000 L Cash 8 9. Date 10 Jan,31 11 Particulars Mortgages payable Interest expense($340000*18%*1month) Cash Debit($) Crdit($) 677 5100 12 13 14