Ethan, Co., purchased a building valued at $250,000 and land valued at $50,000 on January 1, 2013. Ethan paid $20,000 cash and signed a 20-year, 6% mortgage payable for the balance. The amortization schedule shows that Ethan will pay $7,475 in principal the first year. Ethan plans on adjusting the current portion of the mortgage at yearend each December 31.
Requirements
1. Journalize the January 1, 2013 purchase.
2. Journalize the reclassification of the current portion of the mortgage.
3. Journalize the first monthly payment of $2,006 on January 31, 2013. (Round to the nearest dollar.).