Answer:
Blossom Company
Journal Entries:
January 1, 2020:
Debit Cash $311,000
Credit Mortgage Note Payable $311,000
To record the borrowing of 10% mortgage note payable.
December 31, 2020:
Debit Mortgage Note Payable $52,000
Credit Cash $52,000
To record the first repayment of the mortgage note.
Debit Interest Expense $31,100
Credit Cash $31,100
To record the payment of interest on the note.
Explanation:
a) Data and Calculations:
Mortgage Note Payable = $311,000
Interest rate of mortgage = 10%
Annual installment payments = $52,000
Date of repayment = December 31
Interest expense = $31,100 ($311,000 * 10%)
