Question

2. Rouxdy Co. purchased a building that cost $300,000. They paid 10% and signed a 15 – year, 4.5%, mortgage payable for the remainder.a.Journalize the issuance of the mortgage payable. Journalize the first monthly payment of $2,065.48

Answer 1

Particulars	Debit	Credit
Building	$300,000
Cash		$30,000
Mortgage Loan		$270,000
(Entry for asset purchased by Cash and Loan)
Mortgage Loan	1052.98
Interest Expense	1012.5
Cash		2065.48
(Entry for first installment paid)

Interest Expense on first installment = 270000 x 4.5% x 1/12 = 1012.5

Mortgage Loan principal paid back in first installment = 2065.48 - 1012.5 = 1052.98