Answer:
The journal entry to record the first installment payment will include a debit to interest expense of $27,900, mortgage notes payable of $21,248 and a credit to cash account of $49,148
Explanation:
For recording the first installment payment, we have to compute the interest amount which is given below:
Interest amount = value of Mortgage note × rate × year
= $186,000 × 15% × 1 year
= $27,900
Since we have to compute the installment for January 1, 2019, therefore, we take the one year period
Now, we have to compute the principal amount which equals tp
= Installment amount - interest expense
= $49,148 - $27,900
= $21,248
So, the journal entry would be
Interest expense A/c Dr $27,900
Mortgage note payable A/c Dr $21,248
To Cash $49,148
(Being payment of the first installment recorded)
