Kessel Company purchased a building and land with a fair market value of $550,000 (building, $350,000...

Kessel Company purchased a building and land with a fair market value of $550,000 (building, $350,000 and land, $200,000) on January 1, 2018. Kessel signed a 20-year, 6% mortgage payable. Kessel will make monthly payments of $3,940.37. Round to two decimal places. Explanations are not required for journal entries.

Requirements

Journalize the mortgage payable issuance on January 1, 2018.
Prepare an amortization schedule for the first two payments
Journalize the first payment on January 31, 2018.
Journalize the second payment on February 28, 2018.

Solutions

Expert Solution

Amount borrowed = $550,000
Annual interest rate = 6.00%
Monthly interest rate = 6.00%/12
Monthly interest rate = 0.50%
Period = 20 years or 240 months

ekkarill92 answered 2 years ago

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