Cortez borrowed $20,000 from Lego Corporation on January 1, 2023. Cortez signed a three-year, 5% installment note to be paid in three equal payments at the end of each year.

Required:

(a.) Prepare the journal entry to record the borrowing of the funds by Cortez on January 1, 2023.

(b.) Calculate the amount of one installment payment (Hint: go back to Chapter 5).

(c) Prepare the journal entry for the first installment payment on December 31, 2023.

(d.) Prepare the journal entry for the second installment payment on December 31, 2024.