On January 1, 2021, Jalen Company purchased land costing $800,000. Instead of paying cash at the time of purchase, Jalen plans to make four installment payments of $215,221.64 on June 30 and December 31 in 2021 and 2022. The payments include interest at a rate of 6%. Required:Record the purchase of land when the note is issued. Record the first installment payment on June 30, 2021, and the second installment payment on December 31, 2021. Calculate the balance of Notes Payable and Interest Expense on December 31, 2021.

Answer:Jalen journal $

Date

Jan 1,2021

Land Dr. 860,887

Note payable Cr. 860,887

Narration. Issuance of note of above amount payable in four installment for purchase of land.

June 30,2021

Note payable Dr 215,221.64

Cash Cr. 215,221.64

Narration. Payment of first installment on land purchase.

December 31,2021

Note payableDr 215,221.64

Cash. Cr. 215,221.64

Narration. Payment of second installment on land purchase.

2. Balance on note payable as at December 31, 2021 $400,000

Balance on Interest expenses $30,443.28

Explanation:

The land account is debited to recognized it's purchase and a credit is made to the notes payable account to recognise the credit.

The total installment is debited for payment made in the first and second period.

The balance on the note payable represents the two outstanding principal payment of the $800,000 and the interest expenses represents the excess over the principal sum.