Journalizing Installment Notes

On the first day of the fiscal year, a company issues $39,000, 10%, four-year installment notes that have annual payments of $12,303. The first note payment consists of $3,900 of interest and $8,403 of principal repayment.

a. Journalize the entry to record the issuance of the installment notes. If an amount box does not require an entry, leave it blank.

	Cash
	Notes Payable

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b. Journalize the first annual note payment. If an amount box does not require an entry, leave it blank.

	Interest Expense
	Notes Payable
	Cash