Question

Installment Term Loan 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. General Journal Date Description Debit Credit a.) Dec.31 Answer $Answer 0 $Answer 0 Answer Answer 0 Answer 0 Borrowed a mortgage note payable. b.) Jun.30 Interest Expense Answer 0 Answer 0 Answer Answer 0 Answer 0 Answer Answer 0 Answer 0 To record semiannual payment. c.) Dec.31 Answer Answer 0 Answer 0 Mortgage Note Payable Answer 0 Answer 0 Answer Answer 0 Answer 0 To record semiannual payment.

Answer 1

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Dec.31	Cash	850,000
	Mortgage note payable		850,000
	(To record the issuance of mortgage note payable)
June 30	Interest expense (850,000*8%*6/12)	34,000
	Mortgage note payable (49156-34,000)	15,156
	Cash		49,156
	(To record the payment of first installment)
Dec.31	Interest expense ((850,000-15156)*8%*6/12)	33,394
	Mortgage note payable	15,762
	Cash		49,156
	(To record the payment of second installment)