Journalizing Installment Notes

On the first day of the fiscal year, a company issues $47,000, 9%, four-year installment notes that have annual payments of $14,507. The first note payment consists of $4,230 of interest and $10,277 of principal repayment.

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a. Journalize the entry to record the issuance of the installment notes.

	Correct 2 of Item 1	Correct 3 of Item 1
	Correct 4 of Item 1	Correct 5 of Item 1

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Solution

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b. Journalize the first annual note payment. For a compound transaction, if an amount box does not require an entry, leave it blank.

	Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Interest Receivable Correct 2 of Item 2	Correct 3 of Item 2	Correct 4 of Item 2
	Accounts Payable Accounts Receivable Bonds Payable Cash Interest Payable Notes Payable Correct 5 of Item 2	Correct 6 of Item 2	Correct 7 of Item 2
	Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Notes Payable Correct 8 of Item 2	Correct 9 of Item 2	Correct 10 of Item 2