URCES NEXT Exercise 15-10 (Part Level Submission) Dreiling Company borrowed $300

Question

URCES NEXT Exercise 15-10 (Part Level Submission) Dreiling Company borrowed $300,000 on january 1, 20171 by issuing a $300,000, 8% mortgage note payable. The terms call for annual installment payments of $40,000 on December 31 Prepare the journal entries to record the mortgage loan and the first two installment payments. (Round answers to o decimal places, e-g. 15,250. credit automatically indented when amount is entered. Do not indent manually.) count tiles are Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Dec. 31, 2017 Dec. 31, 2018 544 PM

Explanation / Answer

Journal Entries Events General Journal Debit Credit For Issuance of Bonds Jan 1, 2017 Cash Account $3,00,000          To 8% Bonds Account $3,00,000 (To Record the issuance of Bonds) For Payment of First Installment Dec 31, 2017 Interest Expenses $24,000 8% Bonds $16,000         To Cash $40,000 (To Record the payment of First Installment) For Payment of First Installment Dec 31, 2018 Interest Expenses $22,720 8% Bonds $17,280         To Cash $40,000 (To Record the payment of Second Installment) Working Notes: Borrowed Amount = $3,00,000 Interest @ 8% for the year 2017 $24,000 Installment Amount = $40,000 Principal Value = $16,000 Opening Value for the year 2 ($ 300,000-$ 16,000) $2,84,000 Interest @ 8% for the year 2018 $22,720 Installment Amount = $40,000 Principal Value = $17,280

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