Entries for Installment Note Transactions

On January 1 of 2012, Hebron Company issued a $26,000, 4-year, 12% installment note to Ventsam Bank. The note requires annual payments of $8,560, beginning on December 31 of 2012.

Journalize the entries to record the following.

2012
Jan. 1	Issued the note for cash at its face amount.
Dec. 31	Paid the annual payment on the note, which consisted of interest of $3,120 and principal of $5,440.
2015
Dec. 31	Paid the annual payment on the note, which included interest of $917. The remainder of the payment reduced the principal balance on the note.

Issued the note for cash at its face amount.

Year 1 Jan. 1

Paid the annual payment on the note, which consisted of interest of $3,120 and principal of $5,440. If an amount box does not require an entry, leave it blank.

Year 1 Dec. 31

Paid the annual payment on the note, which included interest of $917. The remainder of the payment reduced the principal balance on the note. If an amount box does not require an entry, leave it blank.

Year 4 Dec. 31