On the first day of the fiscal year, a company issues $45,000, 8%, six-year installment notes that have annual

On the first day of the fiscal year, a company issues $45,000, 8%, six-year installment notes that have annual payments of $9,734. The first note payment consists of $3,600 of interest and $6,134 of principal repayment.

a. Journalize the entry to record the issuance of the installment notes.

b. Journalize the first annual note payment.


Answer:

a.
 Cash 45,000
Notes Payable 45,000
Issued installment notes for cash.
b.
 Interest Expense 3,600
Notes Payable 6,134
Cash 9,734
Paid principal and interest on installment
notes.