Spirit World Corp. borrowed $500,000 in the form of a mortgage on January 1, 2020, to finance the purchase of a small warehouse. The mortgage rate is 5 percent, the term is 20 years, and semi-annual payments of $19,918 are made on January 1 and July 1. The following chart shows the first five mortgage payments:

Required

Journalize the establishment of the mortgage and the first mortgage payment made on July 1, 2020.

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B E Semi-annual Interest Beginning Balance Blended Principal Payment Ending Balance Interest Expense Period Payment 2.5% 2 Jan. 1, 2020 $500,000 3 Jul. 1, 2020 $500,000 $19,918 $12,500 $7,418 492,582 4 Jan. 1, 2021 492,582 19,918 12,315 7,603 484,979 Jul. 1, 2021 484,979 19,918 12,124 7,794 477,185 6. Jan. 1, 2022 477,185 19,918 11,930 7,988 469,197 Jul. 1, 2022 469,197 19,918 11,730 8,188 461,009