On December 31, 2014, Thomas, Inc. borrowed $850,000 on an eight percent, 15-yea

Question

On December 31, 2014, Thomas, Inc. borrowed $850,000 on an eight percent, 15-year mortgage note payable. The note is to be repaid in equal semiannual installments of $49,156 (payable on June 30 and December 31). Prepare journal entries to reflect (a) the issuance of the mortgage note payable, (b) the payment of the first installment on June 30, 2015, and (c) the payment of the second installment on December 31, 2015. Round amounts to the nearest dollar.

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General Journal Date Description Debit Credit a.) Dec.31 AnswerCashMortgage Note PayableInterest Expense $Answer $Answer AnswerCashMortgage Note PayableInterest Expense Answer Answer Borrowed a mortgage note payable.
b.) Jun.30 Interest Expense Answer Answer AnswerCashMortgage Note PayableInterest Expense Answer Answer AnswerCashMortgage Note PayableInterest Expense Answer Answer To record semiannual payment.
c.) Dec.31 AnswerCashMortgage Note PayableInterest Expense

Correct
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Answer Answer Mortgage Note Payable Answer Answer AnswerCashMortgage Note PayableInterest Expense Answer Answer To record semiannual payment.

Explanation / Answer

a Dec-31 Cash 850000       Mortgage Note Payable 850000 b Jun-30 Interest Expense 34000 =850000*8%/12*6 Mortgage Note Payable 15156           Cash 49156 c Jun-30 Interest Expense 33394 =(850000-15156)*8%/12*6 Mortgage Note Payable 15762           Cash 49156

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