Question

Shamrock, Inc. issues a $660,000, 10%, 10-year mortgage note on December 31, 2022, to obtain financing for a new building. The terms provide for annual installment payments of $107,412. Prepare the entry to record the mortgage loan on December 31, 2022, and the first installment payment on December 31, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer: See explanation

Step-by-step explanation:

The entry to record the mortgage loan on December 31, 2022 will be:

Debit Cash Account $660,000

Credit 10% Mortgage loan payable $660,000

The entry to record the first installment payment on December 31, 2023 will be:

Debit 10% Mortgage loan payable = $41412

Debit Interest Expenses $600,000 × 10% = $60,000

Credit Cash $107412