On January 1, 2018, Stoops Entertainment purchases a building for $520,000, payi
ID: 2569959 • Letter: O
Question
On January 1, 2018, Stoops Entertainment purchases a building for $520,000, paying $110,000 down and borrowing the remaining $410,000, signing a 9%, 20-year mortgage. Installment payments of $3,688.88 are due at the end of each month, with the first payment due on January 31, 2018.
1. Record the purchase of the building on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Complete the first three rows of an amortization schedule. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
3-a. Record the first monthly mortgage payment on January 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to 2 decimal places.)
3-b. How much of the first payment goes to interest expense and how much goes to reducing the carrying value of the loan? (Round your answers to 2 decimal places.)
Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 1/1/18 01/31/18 02/28/18Explanation / Answer
1-
date
explanation
debit
credit
Jan 1 2018
building
520000
cash
110000
notes payable
410000
2-
Date
Cash Paid
Interest Expense
Decrease in Carrying Value
Carrying Value
1/1/2018
410000
1/31/2018
3688.88
3075
613.88
409386.12
2/28/2018
3688.88
3070.396
618.4841
408767.636
date
explanation
debit
credit
3-
Jan 31 2018
interst expense
3075
notes payable
613.88
cash
3688.88
B-
Interest payment in first installment
3075
Payment of principal
613.88
1-
date
explanation
debit
credit
Jan 1 2018
building
520000
cash
110000
notes payable
410000
2-
Date
Cash Paid
Interest Expense
Decrease in Carrying Value
Carrying Value
1/1/2018
410000
1/31/2018
3688.88
3075
613.88
409386.12
2/28/2018
3688.88
3070.396
618.4841
408767.636
date
explanation
debit
credit
3-
Jan 31 2018
interst expense
3075
notes payable
613.88
cash
3688.88
B-
Interest payment in first installment
3075
Payment of principal
613.88
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