Question

1. Record the issuance of a note payable on Jan 01, 2021.

On January 1, 2021, California Financial purchases a building for $900,000, signing a 5%, 20-year mortgage. Installment payments of $5,939.60 are due at the end of each month, with the first payment due on January 31, 2021. Required: 1. 2. & 3. Record the issuance of the mortgage installment and the first two monthly mortgage payments. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) View transaction list Journal entry worksheet 1 2 Record the issuance of a note payable on Jan 01, 2021. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2021 Record entry Clear entry View general journal 4. If total payments over the 20 years are $1,425,504 ($5,939.60 x 240 monthly payments), how much of this is interest expense and how much is actual payment of the loan?

2. Record the first monthly mortgage payment on January 31, 2021.

3. Record the second monthly mortgage payment on February 28, 2021.

4. If total payments over the 20 years are $1,425,504 ($5,939.60 × 240 monthly payments), how much of this is interest expense and how much is actual payment of the loan? Actual payment = ? Interest expense = ?

Answer 1

1
January 01,2021	Building	900000
	Notes payable		900000
January 31,2021	Interest expense	3750.00		=900000*5%/12
	Notes payable	2189.60
	Cash		5939.60
February 28,2021	Interest expense	3740.88		=(900000-2189.6)*5%/12
	Notes payable	2198.72
	Cash		5939.60
4
	Actual payment	900000
	Interest expense	525504		=1425504-900000
Note: Alternatively Mortgage payable account may be used instead of Notes Payable