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I'm lost on this transaction. A check is written at a business for the mortgage. The check is for $3000 and $2150 is interest and the rest is principle. Where would these amounts go on the journal sheet?

2007-12-23 08:28:39 · 2 answers · asked by Anonymous in Business & Finance Personal Finance

2 answers

debit to interest expense and liability for mortgage. The mortgage is a liability when you take it out so each payment reduces it.

2007-12-23 09:09:32 · answer #1 · answered by shipwreck 7 · 0 0

Cash is credited. Interest expense is debited and the mortgage liability is debited. The amount of interest is the balance of the liability x interest rate x time (typically one month).
The next payment will have a smaller amount for interest because the principal amount of the liability was decreased by the previous payment.

2007-12-23 20:22:39 · answer #2 · answered by Anonymous · 0 0

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