Gunther Company purchased a building on January 1 st by signing a long-term $4,5
ID: 2570581 • Letter: G
Question
Gunther Company purchased a building on January 1st by signing a long-term $4,500,000 mortgage with monthly payments of $50,125. The mortgage carries an interest rate of 8%.
Write the journal entry to record the purchase of the building by signing the long-term mortgage. (You may or may not need all rows of this textbox)
Write the journal entry to record the first monthly payment (Jan. 31st) by Gunther. (You may or may not need all rows of this textbox)
What is the balance in the Mortgage Payable account, after this first monthly payment is recorded?
Write the journal entry to record the second monthly payment (Feb. 28th) by Gunther. (You may or may not need all rows of this textbox)
What is the balance in the Mortgage Payable account, after this second monthly payment is recorded?
Explanation / Answer
The journal entry to record the purchase of the building by signing the long-term mortgage Date Account Titles Debit Credit Jan.1 Building $4,500,000.00 Mortgage Payable $4,500,000.00 The journal entry to record the first monthly payment (Jan. 31st) by Gunther Date Account Titles Debit Credit Jan.31 Interest Expense $30,000.00 Mortgage Payable $20,125.00 Cash $50,125.00 The balance in the Mortgage Payable account, after this first monthly payment is recorded = $4500000 - $20125 = $44,79,875 The journal entry to record the second monthly payment (Feb. 28th) by Gunther. Date Account Titles Debit Credit Feb.28 Interest Expense $29,865.83 Mortgage Payable $20,259.17 Cash $50,125.00 The balance in the Mortgage Payable account, after this second monthly payment is recorded = $44,79,875 - $20259.17 = $44,59,615.83
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