Brief Exercise 10-14 Pharoah Company issues an $845 000 10% 10-year mortgage not

Question

Brief Exercise 10-14 Pharoah Company issues an $845 000 10% 10-year mortgage note on December 31 2019 to obtain nancing or a new building. The terms provide or annua installment payments o n, Prepare the entry to record the mortgage loan on December 31, 2019, and the first installment payment on December 31, 2020. (Credit account titles are automatically indented when amoun is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020

Explanation / Answer

Journal entry :

Date accounts and explanation debit credit Dec 31 2019 Cash a/c 845000      Mortgage note payable a/c 845000 Dec 31,2020 Mortgage note payable a/c 53020 Interest payable a/c (845000*10%) 84500    Cash a/c 137520

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