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Sunland Well Services Ltd. purchased equipment for $904,000 on September 30, 2021. The equipment was purchased...

Sunland Well Services Ltd. purchased equipment for $904,000 on September 30, 2021. The equipment was purchased with a $139,000 cash down payment and through the issue of a $765,000, 5-year, 3.6% mortgage note payable for the balance. The terms provide for the mortgage to be repaid in monthly blended payments of $13,951 starting on October 31.Record the first two instalment payments on October 31 and November 30.

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Answer:

Date Account Titles and Explanation Debit Credit
Oct. 31,2021 Interest expense 2295 =765000*3.6%/12
Mortgage Note Payable 11656
      Cash 13951
Nov. 30,2021 Interest expense 2260 =(765000-11656)*3.6%/12
Mortgage Note Payable 11691
      Cash 13951

ekkarill92 answered 2 years ago
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