Recording and Assessing the Effects of Installment Loans On December 31, 2015, D

Question

Recording and Assessing the Effects of Installment Loans On December 31, 2015, Dehning, Inc., borrowed $500,000 on an 8%, 10-year mortgage note payable. The note is to be repaid in equal quarterly installments of $18,278 (beginning March 31, 2016). a. Prepare journal entries to reflect (1) the issuance of the mortgage note payable (2) the payment of the first installment on March 31, 2016, and (3) the payment of the second installment on June 30, 2016. Round answers to the nearest whole number General Journal Date Description Debit Credit 12/31/15 Cash 500,000 Mortgage note payableV 500,000 3/31/16 Interest expense 0,000 Mortgage note payable 8,278 Cash 18,278 6/30/16 Interest expense Mortgage note payableV Cash 18,278 b. Prepare Excel spreadsheet showing amoritization schedule

Explanation / Answer

Journal entry :

Date General journal Debit Credit 12/31/2015 Cash 500000     Mortgage notes payable 500000 3/31/16 Interest expense 10000 Mortgage notes payable 8278       Cash 18278 6/30/16 Interest expense (500000-8278)*8%*3/12 9834 Mortgage notes payable 8444       Cash 18278

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