Entries for Installment Note Transactions On January 1, Year 1, Luzak Company issued a $55,000, 4-year, 11% installment note to McGee Bank. The note requires annual payments of $17,728, beginning on December 31, Year 1. Journalize the entries to record the following Year 1 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 $6,050 and principal of $11,678. Year 4 Dec. 31 Paid the annual payment on the note, including $1,757 of interest. 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 Cash Notes Payable Paid the annual payment on the note, which consisted of interest of $6,050 and principal of $11,678. For a compound transaction, if an amount box does not require an entry, leave it blank. Interest Expense Notes Payable Year 1, Dec. 31 Cash Paid the annual payment on the note, including $1,757 of interest. The remainder of the payment reduced the principal balance on the note. For a compound transaction, if an amount box does not require an entry, leave it blank. Year 4, Dec. 31 Interest Expense Notes Payable Cash