Entries for installment Note Transactions On the first day of the fiscal year, Shiller Company borrowed $39,000 by giving a four-year, 10% installment note to Sords Bank. The nate requires annual payments of $12,429, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $3,900 and principal repayment of $8,529. a. Journalize the entries to record the following: 1. Issued the installment note for cash on the first day of the fiscal year. If an amount box does not require an entry, leave it blank. Cash Notes Payable Focdback Chuck My Work Record the issuance by debiting Cash and crediting Notes Payable. 2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank, Interest Expense Notes Payable - 89 Cash Teedback Check My Work The cash payment is the same in cach year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the nate decreases cach 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. b. Explain how the notes payable would be reported on the balance sheet at the end of the first year. Notes payable are reported as liabilities on the balance sheet. The portion of the note payable that is due within one year is reported as a current liability. The remaining portion of the note payable that is not due within one year is reported as a n) long-term liability