Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500.The mortgage carries an interest rate of 10 percent.The entry to record the first monthly payment will be:

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The first monthly payment of $5,500 includes both principal and interest payments. The interest for the month can be calculated as 10% of the outstanding loan balance, which is ($600,000 - $5,500) = $594,500. Therefore, the interest for the month is ($594,500 x 10% x 1/12) = $4,954.17. The remaining amount of $545.83 is the principal repayment for the month. Therefore, the entry to record the first monthly payment will be:
Debit: Mortgage payable $545.83
Debit: Interest expense $4,954.17
Credit: Cash $5,500

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Crowley Corporation Purchased a Building on January 2 by Signing $\begin{array}{l}\text { Mortgage Interest Expense } &5,000\\\text { Cash }&&5,000\end{array}$