On January 1,Greene Autos signed a $210,000,6%,30-year mortgage that requires semiannual payments of $7,585 on June 30 and December 31 of each year.The journal entry to record the second semiannual payment would be (round interest calculation to the nearest dollar)to:

Question

Quizplus · Accepted Answer

The semiannual payment of $7,585 includes both principal and interest. To calculate the interest portion, we need to find 6% of the mortgage balance ($210,000). 
Interest Expense = (Mortgage balance x Interest rate x time)
                 = ($210,000 x 6% x 6/12)
                 = $6,261 (rounded to the nearest dollar)
The remaining amount of the payment will be applied to the mortgage principal. Therefore, the journal entry to record the second semiannual payment would be to debit Interest Expense for $6,261, debit Mortgage Payable for $1,324 ($7,585 - $6,261), and credit Cash for $7,585.

On January 1,Greene Autos Signed a $210,000,6%,30-Year Mortgage That Requires