Exercise 10-24 Nance Co. receives $396,400 when it issues a $396,400, 8%, mortga
ID: 2444932 • Letter: E
Question
Exercise 10-24
Nance Co. receives $396,400 when it issues a $396,400, 8%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $22,924 on June 30 and December 31.
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Semiannual
Interest
Period
Cash
Payment
Interest
Expense
Reduction
of Principal
Principal
Balance
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Show List of Accounts
Link to Text
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2014
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Show List of Accounts
Link to Text
Date
Account Titles and Explanation
Debit
Credit
First Installment Payment
Second Installment Payment
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Exercise 10-24
Nance Co. receives $396,400 when it issues a $396,400, 8%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $22,924 on June 30 and December 31.
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Explanation / Answer
Semi annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue date 0 396400 6/30/15 22924 15856 7068 389332 12/31/15 22924 15573 7351 381981 Prepare the journal entries to record the mortgage loan. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2014 Cash 3,96,400 Mortage Notes Payable 3,96,400 Prepare the journal entries to record the first two installment payments Date Account Titles and Explanation Debit Credit june 30, 2015 Mortage Notes Payable 7,068 Interest Expense 15,856 Cash 22,924 Second Installment Payment june 30, 2015 Mortage Notes Payable 7,351 Interest Expense 15,573 Cash 22,924
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