On January 1, 2021, Gundy Enterprises purchases an office building for $151,000, paying $41,000 down and borrowing the remaining
$110,000, signing a 7%, 10-year mortgage. Installment payments of $1,277.19 are due at the end of each month, with the first payment due on January 31, 2021. Prepare Journal entry for January 31,2021.
Recognition of interest payable on mortgage loan for December 2021
Jan 31 2021
Mortgage principal Dr 635.52
Mortgage interest Dr. 641.67
Bank Cr. 1277.19
Narration.payment of principal and interest Interest due on mortgage loan as at January 31 2021.
Explanation:
The monthly installment payments of $1277.19 consist of both the principal sum and accompanying monthly interest.
The interest needs to be first recognized as an expenses into the income statement and increase in the mortgage loan. This will prevent an over deduction on the mortgage loan.
A dichotomy is the division into two parts of a thing, or failing that, it is a set or system that is subject to bipartition, and that generally oppose each other.
In traditional logic, dichotomy is the breakdown or fractionation of a generic concept into one of its specific concepts and its denial. The concept also refers to the law that states that no proposition can be true and false at the same time.