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Rus_ich
1 month ago
7

On January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, Jalen plans t

o make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. The payments include interest at a rate of 6%. Required:Record the purchase of land when the note is issued.Record the first installment payment on June 30, 2021, and the second installment payment on December 31, 2021.Calculate the balance of Notes Payable and Interest Expense on December 31, 2021.
Business
1 answer:
Mariulka [3.1K]1 month ago
6 0

Answer:Jalen journal $

Date

Jan 1,2021

Land Dr. 860,887

Note payable Cr. 860,887

Narration. Issuance of note for the above amount, payable in four installments for land purchase.

June 30,2021

Note payable Dr 215,221.64

Cash Cr. 215,221.64

Narration. Payment of the first installment for the land acquisition.

December 31,2021

Note payableDr 215,221.64

Cash.Cr. 215,221.64

Narration. Payment of the second installment for the land acquisition.

2. Remaining balance on note payable as of December 31, 2021 is $400,000

Interest expense balance is $30,443.28.

Explanation:

The land account is debited to reflect its purchase, while the notes payable account is credited to recognize the liability.

Payments made in the first and second periods debit the respective installment amounts.

The note payable balance indicates the outstanding principal payments of $800,000, whereas the interest expense denotes the additional amount beyond the principal.

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