On November 1, 2009 Nydegger company arranges with an insurancecompany to borrow

Question

On November 1, 2009 Nydegger company arranges with an insurancecompany to borrow $400000 on a 30-year mortages to purchase landand a building to be used in its operations. The land and thebuilding are pledged as collateral for the loan, which has anannual interest rate of 12% compunded monthly. The monthlypayments of @4114 are made aat the end of each month, beginning onNov 30. 2009 . prepare the journal entry to record the purchase ofthe land and building, assuming that 5000 of the purchase price isassignable to the land 2. prepare the journal entries on nov.30 and dec 31 for the monthly payment on the mortgageOn November 1,2009 Nydegger company arranges with an insurance company to borrow$400000 on a 30-year mortages to purchase land and a building to beused in its operations. The land and the building are pledged ascollateral for the loan, which has an annual interest rate of 12%compunded monthly. The monthly payments of @4114 are made aatthe end of each month, beginning on Nov 30. 2009 . prepare thejournal entry to record the purchase of the land and building,assuming that 5000 of the purchase price is assignable to theland 2. prepare the journal entries on nov. 30 and dec 31 forthe monthly payment on the mortgage

Explanation / Answer

Journal entry will be :- Nov 1, 2009 Bank Dr $400,000 Loan A/C - Insurance co. Cr $400,000 Loan for purchase of Bldg & Land
Nov 1, 2009 Asset A/C- Land Dr $5000    Asset A/C - Building Dr$395,000 Bank Cr $400,000 Purchase of assets
Nov30, 2009 Loan A/C - Insurance co.  Dr $4114 Bank Cr $4114 Monthly Loan payment
Dec31, 2009 Loan A/C - Insurance co.  Dr $4114 Bank Cr $4114 Monthly Loan payment

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