Question

Recording and Assessing the Effects of Installment Loans
On December 31, 2015, Dehning, Inc., borrowed $600,000 on an 8%, 10 -year mortgage note payable.
The note is to be repaid in equal quarterly installments of $21,933 (beginning March 31, 2016).

a. Prepare journal entries to reflect (1) the issuance of the mortgage note payable, (2) the payment of the first installment on March 31, 2016, and (3) the payment of the second installment on June 30, 2016.

Round answers to the nearest whole number.

General Journal
Date	Description	Debit	Credit
12/31/15	Answer

Answer	Answer
	Answer

Answer	Answer
3/31/16	Interest expense	Answer	Answer
	Answer

Answer	Answer
	Answer

Answer	Answer
6/30/16	Interest expense	Answer	Answer
	Answer

Answer	Answer
	Answer

Answer

Answer

b. Post the journal entries from part b to their respective T-accounts.

Cash
	Answer	Answer
	Answer	Answer

Interest Expense
	Answer	Answer
	Answer	Answer

Mortgage Note Payable
	Answer	Answer
	Answer	Answer

c. Record each of the transactions from part b in the financial statement effects template. Use negative signs with answers, when appropriate.

Transaction					Cash Asset		+	Noncash Assets		=	Liabilities		+	Contr. Capital	+	Earned Capital		Revenue	-	Expenses	=	Net income
12/31/15 Borrowed on mortgage note payable					$Answer			$Answer			$Answer			$Answer		$Answer		$Answer		$Answer		$Answer
3/31/16 Payment on note					Answer			Answer			Answer			Answer		Answer		Answer		Answer		Answer
6/30/16 Payment on note					Answer			Answer			Answer			Answer		Answer		Answer		Answer		Answer

Answer 1

	Journal entries	Debit	Credit
31-12-2015	Cash	600000
	Mortgage Notes payable		600000
31-03-2016	Notes payable	9933
	Interest expense	12000
	Cash		21933
30-06-2016	Notes payable	10132
	Interest expense	11801
	Cash		21933
		Cash
		600000	21933
			21933
		Interest expense
		12000
		11801
		Mortgage notes payable
		9933	600000
		10132

Event

Cash Asset

+

Non cash asset

=

Liabilities

+

Contributed

+

Earned

Revenue

-

Expense

=

Net income

capital

Capital

31-12-2015

600000

+

=

600000

+

+

-

=

31-03-2016

-21933

+

=

-9933

+

+

-

-12000

=

-12000

31-06-2016

-21933

+

=

-10132

+

+

-

-11801

=

-11801