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On December 31, 2014, Montmartre S.A., borrowed $500,000 on an 8%, 10-year mortgage note payable. The...

On December 31, 2014, Montmartre S.A., borrowed $500,000 on an 8%, 10-year mortgage note payable. The note is to be repaid in equal quarterly instalments of $18,278 (beginning March 31, 2015).

a) Prepare journal entries to reflect (1) the issuance of the mortgage note payable, (2) the payment of the first instalment on March 31, 2015, and (3) the payment of the second instalment on June 30, 2015. Round to the nearest dollar.

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Answer #1
Date General Journal Debit Credit
December 31, 2014 Cash 500000
    Mortgage note payable 500000
March 31, 2015 Interest expense 10000 =500000*8%*3/12
Mortgage note payable 8278
       Cash 18278
June 30, 2015 Interest expense 9834 =(500000-8278)*8%*3/12
Mortgage note payable 8444
       Cash 18278
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