Entries for Installment Note Transactions On January 1, Year 1, Wedekind Company issued a $55,000, 4-year, 11% installment note to Shannon 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. If an amount box does not require an entry, leave it blank. Year 1, Jan. 1 Cash Cash 55,000 Cash 0 Notes Payable Notes Payable 0 Notes Payable 55,000 Feedback Record the issuance by debiting Cash and crediting Notes Payable. Paid the annual payment on the note, which consisted of interest of $6,050 and principal of $11,678. If an amount box does not require an entry, leave it blank. Year 1, Dec. 31 Interest Expense Interest Expense 6,050 Interest Expense 0 Notes Payable Notes Payable 11,678 Notes Payable 0 Cash Cash 0 Cash 17,728 Feedback The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest. After the final payment, the carrying amount on the note is zero, indicating that the note has been paid in full. Paid the annual payment on the note, including $1,757 of interest. 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 Interest Expense Interest Expense 1,757 Interest Expense 0 Notes Payable Notes Payable Notes Payable 0 Cash Cash 0 Cash