Exercise 15-10 (Part Level Submission) Dreiling Company borrowed $300,000 on Jan

Question

Exercise 15-10 (Part Level Submission) Dreiling Company borrowed $300,000 on January 1, 2017, by issuing a $300,000, 8% mortgage note payable. The terms camfor annual installment payments of $40,000 on December 31. ? (a) Your answer is partially correct. Try again. ri ri·to er, the momage a and he firs ista rment payments. Round answers to 0 dec mal places, eg, 15,250. Credit account titles are Pr ire e unn no automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Tcash 300000 Interest Payable 300000 Dec. 31, 2017 Interest Expense 24000 16000 40000 Dec. 31, 2018 Interest Expense 22720 Interest Payable 17280 All Rights Reserved. A Division of John 8:28 PM

Explanation / Answer

SOLUTION

(A)

(B)

Date Accounts titles and Explanation Debit ($) Credit ($) January 1, 2017 Cash 300,000 Mortgage payable 300,000 [To record the issuance of mortgage note] December 31, 2017 Interest expense (300,000 * 8%) 24,000 Mortgage payable 16,000 Cash 40,000 [To record the first installment payment] December 31, 2018 Interest expense (300,000-16,000)*8% 22,720 Mortgage payable 17,280 Cash 40,000 [To record the second installment payment]

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