Entries for Installment Note Transactions

On January 1 of 20Y2, Hebron Company issued a $52,000, 4-year, 11% installment note to Ventsam Bank. The note requires annual payments of $16,761, beginning on December 31 of 20Y2.

Journalize the entries to record the following.

20Y2

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 $5,720 and principal of $11,041.

20Y5

Dec. 31 Paid the annual payment on the note, which included interest of $1,661. 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 $5,720 and principal of $11,041. 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 $1,661. 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