Adair Corporation purchased a building on January 2 by signing a long-term $1,200,000 mortgage with monthly payments of $11,000.The mortgage carries an interest rate of 10 percent.The entry to record the first monthly payment will be:

Question

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The first monthly interest is calculated as $1,200,000 * (10% / 12) = $10,000. The payment reduces the principal by $1,000 ($11,000 - $10,000 interest).

Adair Corporation Purchased a Building on January 2 by Signing