Delmar Company purchased a building on January 1 by signing a long-term $480,000 mortgage with monthly...
Delmar Company purchased a building on January 1 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent.
Record the journal entry for the purchase of the building.
Record the journal entry for the first mortgage payment on February 1.
Record the journal entry for the second mortgage payment on March 1.
Homework Answers
Journal entry :
| Date | accounts & explanation | debit | credit |
| Jan 1 | Building | 480000 | |
| Mortgage notes payable | 480000 | ||
| (To record purchase building) | |||
| Feb 1 | Mortgage notes payable | 400 | |
| Interest expense (480000*10%*1/12) | 4000 | ||
| Cash | 4400 | ||
| (To record first mortgage payment) | |||
| Mar 1 | Mortgage notes payable | 403 | |
| Interest expense (480000-400*10%*1/12) | 3997 | ||
| Cash | 4400 | ||
| (To record second mortgage payment) |
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