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Exercise 10-24 Cullumber Company receives $385,000 when it issues a $385,000, 6%, mortgage note payable to finance the construction of a building at December 31, 2017. The terms provide for annual installment payments of $39,641 on December 31.

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Answer #1

a) Journal entry

Date account and explanation Debit Credit
Dec 31,2017 Cash 385000
Mortgage note payable 385000

b) Journal entry

Date account title and explanation Debit Credit
First installment payment
Dec 31,2018 Interest expense (385000*6%) 23100
Mortgage note payable 16541
Cash
39641
Second installment payment
Dec 31,2019 Interest expense (368459*6%) 22108
Mortgage note payable 17533
Cash 39641
1 1
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