Question

On January 1, 2018, Gundy Enterprises purchases an office for $360,000, paying $60,000 down and borrowing the remaining $300,000, signing a 7%, 10-year mortgage. Installment payments of $3,483.25 are due at the end of each month, with the first payment due on January 31, 2018. Required: 1. Record the purchase of the building on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

The Journal entry is as follows:

On January 1, 2018,

Building A/c Dr. $360,000

To cash A/c $60,000

To Mortgage Loan A/c $300,000

(To record the purchase of the building on January 1, 2018 by paying some amount as a down payment and take loan for rest of the payment)