Metlock, Inc. issues an $785,000, 10%, 10-year mortgage note on December 31, 201

Question

Metlock, Inc. issues an $785,000, 10%, 10-year mortgage note on December 31, 2019, to obtain financing for a new building. The terms provide for annual installment payments of $127,755. Prepare the entry to record the mortgage loan on December 31, 2019, and the first installment payment on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020

Explanation / Answer

Dec-31-19 Cash 785000       Notes payable 785000 Dec-31-20 Notes payable 49255 Interest expense 78500 =785000*10%        Cash 127755

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