Question

On December 31 of the current year, Jones Company purchased a building for $100,000, paying $40,000 in cash and signing a 15-year mortgage for the $60,000, taken out at 5% interest. The journal entry to record the purchase of the building would be:

Answer 1

These are the correct journal entries:

Account Debit Credit

Building $100,000

Cash $40,000

Mortgage Payable $60,000

Interest Expense $3,000

Accrued Interest Payable $3,000