Answer:
See the journal entries below.
Explanation:
The journal entries will look as follows:
Date Particulars Debit ($) Credit ($)
31 Dec 2018 Cash 1,500,000
Mortgage payable 1,500,000
(To record $1,500,000, 10%, 10-year mortgage note issued.)
31 Dec 2018 Mortgage payable (w.2) 94,118
Interest exp. on Mortgage (w.1) 150,000
Cash 244,118
(To record first installment payment on mortgage note.)
Workings:
w.1. Interest expense on Mortgage = Mortgage payable * Interest rate = $1,500,000 * 10% = $150,000
w.2. Mortgage note principal repaid = Annual installment payment - w.1 = $244,118 - $150,000 = $94,118
