question archive On January 1, 2021 Exibit Company purchased land costing $800
On January 1, 2021 Exibit Company purchased land costing $800
Subject:AccountingPrice:3.87 Bought7
On January 1, 2021 Exibit Company purchased land costing $800.000. Instead of paying cash at the time of purchase. Jalen plans to make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. They payments include interest at a rate of 6%
1.Record the purchase of land when the note is issued
2. Record the first installment payment on June 30, 2021 and the second installment payment on December 31, 2021
3.Calculate the balance of Notes payable and interest expense on December 31, 2021
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
a) Journal entry
| Date | account and explanation | debit | Credit |
| Jan 1, 2021 | Land | 800000 | |
| Notes payable | 800000 | ||
| (To record purchase land) |
b) Journal entry
| Date | account and explanation | debit | credit |
| June 30, 2021 | Interest expense (800000*6%*6/12) | 24000 | |
| Notes payable | 191221.64 | ||
| Cash | 215221.64 | ||
| (To record installment paid) | |||
| Dec 31, 2021 | Interest expense (800000-191221.64)*6% | 18263.35 | |
| Notes payable | 196958.29 | ||
| Cash | 215221.64 | ||
| (To record amount paid) |
3) Interest expense on December 31, 2021 = 24000+18263.25 = 42263.25
Notes payable = 800000-191221.64-196958.29 = 411820.07
