If you buy a property worth $30,000. Paid Cash $7000 and the rest has 8% interest to be paid as notes payable in 3 years. What will be the journal entry??
To record the purchase of the property with $7,000 cash and the remaining amount as a notes payable with 8% interest to be paid in 3 years, you would make the following journal entry:
1. Debit Property Account by $30,000
Credit Cash Account by $7,000
Credit Notes Payable Account by $23,000 (the remaining balance)
This entry reflects the purchase of the property, reducing the Cash account by the amount paid and increasing the Property account by the full amount. The remaining balance is recorded as a liability in the Notes Payable account.
Keep in mind that this entry doesn't account for the interest component of the notes payable. The calculation of the interest expense and subsequent journal entries would depend on the terms and conditions of the note agreement, such as the compounding period and payment terms.