Exercise 10-13 Jernigan Co. receives $180,000 when it issues a $180,000, 10%, mo

Question

Exercise 10-13

Jernigan Co. receives $180,000 when it issues a $180,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2017. The terms provide for annual installment payments of $30,000 on December 31.

Prepare the journal entries to record the mortgage loan and the first two payments. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

list of usable accounts:

Accounts Payable
Accounts Receivable
Accumulated Depreciation-Equipment
Bonds Payable
Cash
Common Stock
Cost of Goods Sold
Depreciation Expense
Discount on Bonds Payable
Equipment
Federal Income Taxes Payable
Federal Uemployment Taxes Payable
FICA Taxes Payable
Gain on Bond Redemption
Income Tax Expense
Income Tax Payable
Insurance Expense
Interest Expense
Interest Payable
Inventory
Lease Liability
Loss on Bond Redemption
Mortgage Payable
Notes Payable
Notes Receivable
Other Operating Expenses
Paid-in Capital in Excess of Par-Common Stock
Payroll Tax Expense
Preferred Stock
Premium on Bonds Payable
Prepaid Insurance
Retained Earnings
Salaries and Wages Expense
Salaries and Wages Payable
Sales Revenue
Sales Taxes Payable
Service Revenue
State Income Taxes Payable
State Unemployment Taxes Payable
Subscription Revenue
Ticket Revenue
Unearned Service Revenue
Unearned Subscription Revenue
Unearned Ticket Revenue

Explanation / Answer

Dec-31-17 Cash 180000         Notes Payable 180000 Dec-31-18 Interest expense 18000 =180000*10% Notes Payable 12000          Cash 30000 Dec-31-19 Interest expense 16800 =(180000-12000)*10% Notes Payable 13200          Cash 30000

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