Requirement 1. Journalize the transactions in the Right Aid Pharmacies general journal. Round all answers to the nearest dollar. Explanations are not required. ​(Record debits​ first, then credits. Exclude explanations from any journal entries. Round all answers to the nearest​ dollar.)

Question

Mar. ​1, 2024​: Borrowed $ 24,000 from Milton Bank. The seven​- ​year, 15​% note requires payments due​ annually, on March 1. Each payment consists of $ 35,000 principal plus one​ year's interest.
The journal entry for this is Cash 245,000 debit
Notes Payable 245,000 Credit.

Mortgaged the warehouse for 350,000 with Sammon Bank. The mortgage requires monthly payments of 5,000. The interest rate on the note is 7% and accrues monthly. The first payment is due on Jan 1, 2025.
The Journal entry for his is
Dec 1- Cash 350,000 debit
Mortgage Payable 350,000 credit.
Dec 31- Recorded Interest accrued on the Sammon Bank note
this is Interest Expense 2,042 debit and Interest Payable 2,042 credit.
Recorded interest accrued on the Milton Bank Note.
Dec 31 Interest expense is 30,625 debit and interest payable 30,625 credit.
Jan 1- Paid Sammon Bank Monthly Mortgage Payment
this is Mortgage payment debit 2,958 debit, interest payable 2,042 debit and cash 5,000 credit.

Journalize Paying Sammon Bank monthly mortgage payment for Feb 1, 2025

Answer 1

Here are the journal entries for the transactions you provided:

Mar. 1, 2024

1. Borrowed $24,000 from Milton Bank.

   • Debit: Cash 24,000
   • Credit: Notes Payable 24,000

2. Mortgaged the warehouse for $350,000 with Sammon Bank.

   • Debit: Cash 350,000
   • Credit: Mortgage Payable 350,000

Dec. 31, 2024

1. Recorded interest accrued on the Sammon Bank note (for one month).

   • Debit: Interest Expense 2,042
   • Credit: Interest Payable 2,042

2. Recorded interest accrued on the Milton Bank note (for the year).

   • Debit: Interest Expense 30,625
   • Credit: Interest Payable 30,625

Jan. 1, 2025

1. Paid Sammon Bank Monthly Mortgage Payment.
   • Debit: Mortgage Payable 2,958
   • Debit: Interest Payable 2,042
   • Credit: Cash 5,000

Feb. 1, 2025 (For the monthly mortgage payment):

1. Paid Sammon Bank Monthly Mortgage Payment.
   • Debit: Mortgage Payable 2,958
   • Debit: Interest Expense (or Interest Payable, depending on the accounting method used). 2,042
   • Credit: Cash 5,000

Make sure to adjust the "Interest Expense" or "Interest Payable" on the Feb. 1 entry as per your company's accounting policy regarding interest recognition. If a specific date has not been mentioned for the interest accrued in February, you may choose to record it in the same way as in January, assuming it also includes interest for that month.

Answer 2

your journal entry for feb 1, 2025 is wrong

Answer 3

I apologize for any confusion in my previous response. Let’s clarify the journal entry for the payment made to Sammon Bank on February 1, 2025, based on the context provided.

Since the mortgage requires monthly payments of $5,000 and has a 7% annual interest rate accruing monthly, we first need to calculate the corresponding interest for February.

Calculation of Interest for February:

• Monthly Interest Rate = Annual Rate / 12 months = 7% / 12 = 0.5833% (approximately)
• Monthly Interest on $350,000 = $350,000 x 0.005833 = $2,042 (approximately, for one full month).

Journal Entry on February 1, 2025:

1. When paying the mortgage payment, the payment includes both principal and interest. Here’s the breakdown:
   • Total monthly payment: $5,000
   • Interest portion: $2,042
   • Principal portion: $5,000 - $2,042 = $2,958

Journal Entry:

• Debit: Mortgage Payable 2,958
• Debit: Interest Payable (if previously accrued) or Interest Expense 2,042
• Credit: Cash 5,000

This reflects the payment of the mortgage, with the appropriate allocation between principal and interest.

Thank you for your patience, and I hope this accurately captures the required transaction!

Answer 4

No.
It's Feb 1. Mortgage Payable Debit 2976 , Interest Expense Debit 2024, Cash credit 5,000

Knowing this, journalize for March 1, 2025

Answer 5

Thank you for providing the correct breakdown for the February 1 transaction. Based on your input, here’s how to journalize the transaction for March 1, 2025, which will include the payment for the mortgage and the interest accrued for that month.

March 1, 2025 Payment:

For the payment made on March 1, 2025, involving the mortgage payment, we will assume similar calculations as before unless specified otherwise. Using the same interest rate of 7%:

1. Monthly Interest Calculation:

   • Interest on remaining balance (assuming the principal is decreasing based on previous payments) would need to be calculated based on the new principal. However, since you haven't provided the new balance after the February payment, I will assume the interest remains similar for this example.

   Based on your previous structure:

   • Principal Payment: $2,976 (per your input)
   • Interest Payment: $2,024 (per your input)
   • Total Payment: $5,000

Journal Entry on March 1, 2025:

Assuming the amounts given are consistent:

• Debit: Mortgage Payable 2,976
• Debit: Interest Expense 2,024
• Credit: Cash 5,000

Summary:

This entry reflects the payment made toward the mortgage on March 1, 2025, with the correct distribution between principal and interest. If a new interest calculation is necessary based on the remaining balance after previous payments, please provide that detail, and I can make adjustments accordingly. Thank you!

Answer 6

No. Are you taking into account that the mortgage is being paid monthly , with a 7% interest rate?

Answer 7

Thank you for your patience. Let's accurately reflect the monthly payment schedule, taking into account the mortgage's declining balance and the 7% interest rate.

Details:

• Original Mortgage Amount: $350,000
• Monthly Payment: $5,000
• Monthly Interest Rate: 7% annual rate / 12 months = 0.5833% per month

Calculation of the Interest and Principal Payments:

February Payment: From your previous statement:

• Mortgage Payable Debit: $2,976
• Interest Expense Debit: $2,024
• Total Credit (Cash): $5,000

Now, after the payment on February 1, the new balance of the Mortgage Payable should be:

• Remaining Mortgage Balance after February Payment:
  $350,000 (original mortgage) - $2,976 (principal payment in February) = $347,024

March Payment Calculation:

Now, let's calculate for March 1, 2025:

1. Calculate Interest for March:

   • Interest for March = $347,024 * (7% / 12) = $347,024 * 0.005833 ≈ $2,025

2. Principal Payment Calculation (the new principal):

   • Total Payment = $5,000
   • Principal Payment = Total Payment - Interest Payment
     = $5,000 - $2,025 = $2,975

Journal Entry on March 1, 2025:

With the calculations considered:

• Debit: Mortgage Payable 2,975
• Debit: Interest Expense 2,025
• Credit: Cash 5,000

This entry reflects the next payment made on March 1, 2025, with accurate distribution for the principal and interest, taking into account the mortgage nature of the loan. If there are any specific variations or adjustments you would like to indicate, let me know. Thank you!

Answer 8

This is still not correct.

Answer 9

I apologize for the confusion. Let me recalculate with the monthly payments taken into account, ensuring we correctly apply the calculations for interest and principal from the outstanding mortgage balance.

Understanding the mortgage payment scenario:

• Original Mortgage Amount: $350,000
• Monthly Payment: $5,000
• Interest Rate: 7% annually, or 0.5833% monthly.

Transaction History so far:

1. January Payment (assumed as initial payment):

   • Interest Expense: $2,042
   • Principal Payment: $2,958
   • Cash Payment: $5,000

2. February Payment:

   • Interest Expense: $2,024
   • Principal Payment: $2,976
   • Cash Payment: $5,000

After these payments, the remaining mortgage balance needs to be calculated.

Balance Calculation at Start of March

1. After January Payment:

   • Remaining Balance = $350,000 - $2,958 = $347,042

2. After February Payment:

   • Remaining Balance = $347,042 - $2,976 = $344,066

March Interest Calculation:

1. Calculate Interest for March:

   • Interest for March = $344,066 * (7% / 12)
   • Interest for March = $344,066 * 0.0058333 = $2,008 (approximately)

2. Principal Payment Calculation for March:

   • Total Payment = $5,000
   • Total Payment = $5,000 - $2,008 = $2,992

Correct Journal Entry for March 1, 2025:

• Debit: Mortgage Payable 2,992
• Debit: Interest Expense 2,008
• Credit: Cash 5,000

Thank you for your correction, and I appreciate your understanding. Please let me know if this matches your expectations, or if there are additional details or corrections you would like to share.

Answer 10

The correct answer was 2,993 / 2,007.

Now journal March 1 paid the first installment on note due to Milton Bank

Answer 11

Thank you for your patience and clarification. Now, let’s journalize the transaction for the payment of the first installment on the note due to Milton Bank on March 1, 2025.

Details of the Note:

• Loan Amount: $24,000
• Interest Rate: 15% annually
• Annual Payment: Each payment consists of $35,000 principal plus one year's interest.

Payment Calculation:

1. Interest Calculation on March 1:

   • Annual Interest = $24,000 × 15% = $3,600
   • Monthly Interest = $3,600 / 12 = $300

2. Principal Payment Calculation: The total payment consists of the principal payment plus the interest.

   Since the note requires payments due annually of $35,000 (the phrasing seems to suggest that payments include a portion towards principal and interest), we should journal as follows:

Total Payment due on March 1:

• Total Payment: $35,000 (stated, but this appears incorrect since $35,000 is the annual total divided for this payment; if making a single installment, still apply the full principle + interest as noted)
• Monthly Interest for March = $300
• Total Payment for Principal + Interest = $35,000 (as indicated)

Journal Entry for March 1, 2025:

• Debit: Notes Payable 35,000
• Debit: Interest Expense 300
• Credit: Cash 35,300

This entry reflects the total amount payable to Milton Bank, including the principal and interest portions, and indicates the reduction in notes payable and the corresponding cash credit.

If the $35,000 includes another context, please adjust accordingly as required, and let me know if it necessitates a different breakdown. Thank you!