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Elan Coil [88]
3 years ago
10

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.
Business
1 answer:
Nataly_w [17]3 years ago
4 0

Answer:Gundy Enterprise journal $

Date

Jan 31 2021

Income statementl Dr 641.67

Mortage Interest. Cr. 641.67

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.

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