Moore Co. receives $110,000 when it issues a $110,000, 8%,mortgage note payable

Question

Moore Co. receives $110,000 when it issues a $110,000, 8%,mortgage note payable to finance the construction of a building atDecember 31, 2007. The terms provide for semiannual installmentpayments of $7,041 on June 30 and December 31.

Prepare the journal entries to record the mortgage loan and thefirst two installment payments. (For multipledebit/credit entries, list accounts in order of magnitude. Round all answers to 0 decimal places.)

Issuance of Note

First installment payment

Second installment payment

Date Account /Description Debit Credit Dec. 31 SalesInterest expenseSalaries and wages expenseCashAccounts receivableMortgage notes payable $          Mortgage notes payableAccounts receivableInterest expenseCashSalesSalaries and wages expense $

Explanation / Answer

31-Dec

30-Jun

31-Dec

Issuance ofNote Dr. Cr.

31-Dec

cash $110,000        Mortgagepayable $110,000 First installmentpayment

30-Jun

Mortgage Payable $2,641 Interest Expense ( $110000 X 8% X 6 /12) $4,400           Cash $7,041 Second installmentpayment

31-Dec

Mortgage Payable $2,747 Interest expense ( { $110000 - $2641 } X8% x6/12) $4,294            Cash $7,041

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