On June 30, Collins Management Company purchased land for $560,000 and a building for $520,000, paying $360,000

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Question:

On June 30, Collins Management Company purchased land for $560,000 and a building for $520,000, paying $360,000 cash and issuing a 6% note for the balance, secured by a mortgage on the property. The terms of the note provide for 20 semiannual payments of $36,000 on the principal plus the interest accrued from the date of the preceding payment.

Journalize the entry to record (a) the transaction on June 30, (b) the payment of the first installment on December 31, and (c) the payment of the second installment the following June 30. Assume a 360-day year. Refer to the Chart of Accounts for the exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS

Collins Management Company

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
213	Interest Payable
214	Notes Payable
215	Salaries Payable
216	Social Security Tax Payable
217	Medicare Tax Payable
218	Employees Federal Income Tax Payable
219	Employees State Income Tax Payable
221	Retirement Savings Deductions Payable
224	Federal Unemployment Tax Payable
225	State Unemployment Tax Payable
226	Vacation Pay Payable
227	Unfunded Pension Liability
228	Product Warranty Payable
229	EPA Fines Payable
230	Litigation Claims Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
524	Depreciation Expense-Building
525	Delivery Expense
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Supplies Expense
535	Payroll Tax Expense
536	Vacation Pay Expense
537	Pension Expense
538	Cash Short and Over
539	Product Warranty Expense
540	Damage Awards and Fines
541	Miscellaneous Expense
710	Interest Expense

Journal

Scroll down to access pages 2 through 3 of the journal.

a. Journalize the entry to record the transaction on June 30. Assume a 360-day year. Refer to the Chart of Accounts for the exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

b. Journalize the entry to record the payment of the first installment on December 31. Assume a 360-day year. Refer to the Chart of Accounts for the exact wording of account titles.

PAGE 2

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3

c. Journalize the entry to record the payment of the second installment the following June 30. Assume a 360-day year. Refer to the Chart of Accounts for the exact wording of account titles.

PAGE 3

JOURNAL