Question

Jay John Inc. recently paid a $40,000 installment on its 20-year mortgage. Out of the $40,000 total payment, $12,000 went towards reducing the principal, and the balance went towards interest. The journal entry to record this payment includes a

Answer 1

Step-by-step explanation:

The journal entry is shown below:

Interest expense A/c Dr $28,000

Mortgage payable A/c $12,000

To Cash A/c $40,000

(Being the installment is paid for cash and the remaining balance is debited to the interest expense account)

Simply we debited the interest expense and mortgage payable account and credited the cash account as cash is paid