Mod 6

Date

Accounts and Explanation

Debit

Credit

2014

Mar. 1

Cash

360,000

Notes Payable

360,000

Dec. 1

Cash

200,000

Mortgage Payable

200,000

Dec. 31

Interest Expense ($200,000 × 0.09 × 1/12)

Interest Payable

Dec. 31

Interest Expense ($360,000 × 0.10 × 10/12)

Interest Payable

2015

Interest Payable

Jan. 1

Mortgage Payable ($4,000 − $1,500)

Cash

Feb. 1

Interest Expense

Mortgage Payable ($4,000 − $1,481)

Cash

Mar. 1

Interest Expense

Mortgage Payable ($4,000 − $1,462)

Cash

Mar. 1

Interest Payable

Interest Expense($360,000 × 0.10 × 2/12)

Notes Payable

Cash

Beginning Balance

Principal

Payment

Interest Expense

Total Payment

Ending Balance

12/01/2014

$ 200,000

01/01/2015

$ 200,000

$ 2,500

1,500

$ 4,000

197,500

02/01/2015

03/01/2015

Interest Expense

=

Carrying Amount

×

Market interest rate

×

Time

$1,500

=

$200,000

×

0.09

×

1/12