Answer:
1. Debit Credit
1/1/2021
Buildings $305,000
Cash $55,000
Mortgage payable $250,000
2. Date Cash paid interest expense decrease in CV Carrying value
1/1/2021 $250,000
1/31/2021 $3,166.89 $1875.00 $1,291.89 $248,708.11
2/28/2021 $3,166.89 $1865.31 $1301.58 $247,406.53
3 a. Debit Credit
12/31/2021
interest expense $1,875
mortgage payable $1,291.89
cash $3,166.89
3 b. The amount of firts payment that goes to interest expense is 1,875 and to reduce the cv is $1,291.89
Explanation:
1. The purchase of the building on January 1, 2021 would be record as follows:
Debit Credit
1/1/2021
Buildings $305,000
Cash $55,000
Mortgage payable $250,000
2. The first three rows of an amortization schedule would be as follows:
Date Cash paid interest expense decrease in CV Carrying value
1/1/2021 $250,000
1/31/2021 $3,166.89 $1875.00 $1,291.89 $248,708.11
2/28/2021 $3,166.89 $1865.31 $1301.58 $247,406.53
3 a. The first monthly mortgage payment on January 31, 2021 record would be as follows:
Debit Credit
12/31/2021
interest expense $1,875
mortgage payable $1,291.89
cash $3,166.89
3 b.
The amount of firts payment that goes to interest expense is 1,875 and to reduce the cv is $1,291.89
