Question

On January 1, 2021, Gundy Enterprises purchases an office building for $338,000, paying $58,000 down and borrowing the remaining $280,000, signing a 9%, 10-year mortgage. Installment payments of $3,546.92 are due at the end of each month, with the first payment due on January 31, 2021.

Required:
Record the purchase of the building on January 1, 2021.

Answer 1

Debit Building $338,000

Credit Cash $58,000

Credit Notes Payable $280,000

Step-by-step explanation:

Preparation of the journal entry to Record the purchase of the building on January 1, 2021.

Based on the information given we were told that the company purchases an office building for the amount of $338,000 which means that if they paid $58,000 down and as well borrowed the remaining amount of $280,000 the journal entry to Record the purchase of the building on January 1, 2021 will be :

Debit Building $338,000

Credit Cash $58,000

Credit Notes Payable $280,000

(Being to record the purchase of building)