Question: The Division Company purchased a building on January 1 by singing a $300,000 mortgage note payable with monthly payments of $2,000. The mortgage note payable carries an interest rate of 6%.
1. The entry to record the mortgage payment would include:
a. a credit to cash for $300,000
b. a credit to cash for $298,000
c. a debit to mortgage note payable for $300,000
d. a credit to mortgage note payable for $298,000
e. a credit to mortgage note payable for $300,000
2. Recording the first monthly payment would include
a. a cash disbursement for $1,500
b. interest expense of $1,500
c. a decrease in mortgage note payable of $2,000
d. interest expense of $2,000
e. both b and c
3. The amount owed on the mortgage note payment at the end of the first month, i.e. after the first payment, is
a. 282,000
b. 299,500
c. 297,500
d. 298,500
e. 298,000