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ACC 291 WileyPLUS Week 3 Assignment Question 5 Exercise E10-15

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ACC 291 WileyPLUS Week 3 Assignment Question 5 Exercise E10-15
Correct.
Leoni Co. receives $240,000 when it issues a $240,000, 10%, mortgage note payable to finance
the construction of a building at December 31, 2011. The terms provide for semiannual
installment payments of $20,000 on June 30 and December 31.
Prepare the journal entries to record the mortgage loan and the first two installment payments.
(For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Date Account/Description Debit Credit
2011
Dec. 31 Cash 240000
Mortgage notes payable 240000
2012
June 30 Interest expense 12000
Mortgage notes payable 8000
Cash 20000
2012
Dec. 31 Interest expense 11600
Mortgage notes payable 8400
Cash 20000
Date Account/Description Debit Credit
2011 Issuance of note
Dec. 31 Cash 240,000
Mortgage notes payable 240,000
2012 First installment payment

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June 30 Interest expense ($240,000 × 10% × 6/12) 12,000
Mortgage notes payable 8,000
Cash 20,000
2012 Second installment payment
Dec. 31 Interest expense [($240,000 - $8,000) × 10% × 6/12] 11,600
Mortgage notes payable 8,400
Cash 20,000

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