Exercise 15-10 Dreiling Company borrowed $506,000 on lanuary 1, 2017, by issuing

Question

Exercise 15-10 Dreiling Company borrowed $506,000 on lanuary 1, 2017, by issuing a $506,000, 8% mortgage note payable. The terms call for annual installment payments of $46,000 on December 31 Your answer is correct. Prepare the journal entries to record the mortgage loan and the first two installment payments. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 Cah 5060DLD Mortgage Payable 505000 Dec. 31, 2017 Interest Expensse 40480 Mortgage Payable 5520 Cash Dec. 31, 2018 Interest Expense 40038.4 Mortgage Payable 5961.6 SHOW SOLUTION

Explanation / Answer

Calculate current liabilities and long term liability at december 31, 2017

Current liability 5961.60 Long term liability (506000-5520-5961.60) 494518.40

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