Installment Term Loan On December 31, 2009, Beam, Inc borrowed S900 000 on an 8%
ID: 2520480 • Letter: I
Question
Installment Term Loan On December 31, 2009, Beam, Inc borrowed S900 000 on an 8%, 10-year mortgage note payable. The note s to be repaid in equal quarter install ments of S 900 eginnin March 3·2010, epare our (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 entries reflect General Journal Date Description Debit Credit Dec 31 Borrowed a mortgage note payable. Mar31 Interest Expense Cash To record quarterly payment. Jun.30 Mortgage Note Payable To record quarterly payment.Explanation / Answer
Journal entry :
Date accounts & explanation debit credit Dec 31 Cash 900000 Mortgage note payable 900000 (To record borrowed a mortgage note payable) Mar 31 Interest expense (900000*8%*3/12) 18000 Mortgage note payable 14900 cash 32900 (To record quaterly payment) June 30 Interest expense (900000-14900)*8%*3/12 17702 Mortgage note payable 15198 Cash 32900 (To record quaterly payment)