On january 1, 2018, brazos company purchased equipment and signed a sixminusyear mortgage note for $ 186 comma 000 at 15%. the note will be paid in equal annual installments of $ 49 comma 148, beginning january 1, 2019. on january 1, 2019, the journal entry to record the first installment payment will include a (round your answer to the nearest whole number.)

The journal entry to record the first installment payment will include a debit to interest expense of $27,900, mortgage notes payable of $21,248 and a credit to cash account of $49,148

Explanation:

For recording the first installment payment, we have to compute the interest amount which is given below:

Interest amount = value of Mortgage note × rate × year

                           = $186,000 × 15% × 1 year

                           = $27,900

Since we have to compute the installment for January 1, 2019, therefore, we take the one year period

Now, we have to compute the principal amount which equals tp

= Installment amount - interest expense

= $49,148 - $27,900

= $21,248

So, the journal entry would be

Interest expense A/c Dr             $27,900

Mortgage note payable A/c Dr   $21,248

    To Cash                                                       $49,148

(Being payment of the first installment recorded)

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