On December 31 of the current year, Jones Company purchased a building for $100,000, paying $40,000 in cash and signing a 15-year mortgage for the $60,000, taken out at 5% interest. The journal entry to record the purchase of the building would be:
DR/ Building 100,000 cr/ mortgage payable 60,000 cr/ cash 40,000
The correct journal entry to record the purchase of the building would be:
DR Building 100,000
CR Mortgage Payable 60,000
CR Cash 40,000
The journal entry to record the purchase of the building would be as follows:
Debit (DR) Building: $100,000
Credit (CR) Mortgage Payable: $60,000
Credit (CR) Cash: $40,000