It very frequently happens that a transaction involves more than the exchange of cash for real property. There may be a mortgage or some other lien which the purchaser assumes; or, more often, the purchaser may give a mortgage as a part of the price (SectionSection 52, 53).

In the first instance the journal entry should show that the seller is relieved of any obligation which is assumed by the purchaser, and in many cases this entry should include some mention of interest on the mortgage. It may be overdue, or it may be the sum which has accrued since the last interest date, as in the case of property sold on the 1st of August subject to a mortgage payable on which interest had been paid up to the 1st of June.

In case a mortgage were assumed by the purchaser, the journal entry on the books of the seller would take the following form:

Mortgages Payable .................................

$......

To Real Estate .................................

$......

For mortgage No ................................assumed by

.........................................................on the

purchase of property No..........

In the case of overdue interest assumed by the purchaser, the following journal entry would be made by the seller:

Mortgaages Payable ................................

$......

Overdue Mortgage Interest Payable...........

..............

To Real Estate ......................................

$ ............

If accrued interest not yet payable be included, the entry would be:

Mortgages Payable ............................

$......

Mortgage Interest Payable ..................

................

To Real Estate ....................................

$......