Installment Term Loan On December 31, 2009, Beam, Inc., borrowed $950,000 on an
ID: 2520347 • Letter: I
Question
Installment Term Loan On December 31, 2009, Beam, Inc., borrowed $950,000 on an 89%, 10-year mortgage note payable. The note is to be repaid in equal quarterly Installments of $34,728 (beginning March 31, 2010). Prepare journal entries to reflect (a) the issuance of the mortgage note payable. (b) the payment of the first installment on March 31, 2010, and (c) the payment of the second installment on june 30, 2010. Round amounts to the nearest dollar General Journal Date Description Debit Credit Dec.31 Borrowed a mortease note payable Mar 31 Interest Expense Cash To record quarterly payment. Jun.30 Mortgege Note Payable To record quarterly payment.Explanation / Answer
Journal entry :
Date accounts & explanation debit credit Dec 31 Cash 950000 Mortgage note payable 950000 (To record borrowed a mortgage note payable) Mar 31 Interest expense (950000*8%*3/12) 19000 Mortgage note payable 15728 cash 34728 (To record quaterly payment) June 30 Interest expense (950000-15728)*8%*3/12 18685 Mortgage note payable 16043 Cash 34728 (To record quaterly payment)