Question
On the first day of the fiscal year, a company issues $90,000, 6%, five-year installment notes that have annual payments of $21,366. The first note
On the first day of the fiscal year, a company issues $90,000, 6%, five-year installment notes that have annual payments of $21,366. The first note payment consists of $5,400 of interest and $15,966 of principal repayment. Journalize the following transactions. Be sure to include the year in the date for both entries. Refer to the Chart of Accounts for exact wording of account titles.
2016 Jan. 1 Installment notes are issued
2017 Jan. 1 First annual note payment is made
CHART OF ACCOUNTS-General Ledger
ASSETS- 110 Cash, 111 Petty Cash, 121 Accounts Receivable, 122 Allowance for Doubtful Accounts, 126 Interest Receivable, 127 Notes Receivable, 131 Merchandise Inventory, 141 Office Supplies, 191 Land, 194 Office Equipment, 195 Accumulated Depreciation-Office Equipment
LIABILITIES-210 Accounts Payable, 221 Salaries Payable, 231 Sales Tax Payable, 232 Interest Payable, 241 Notes Payable, 251 Bonds Payable, 252 Discount on Bonds Payable, 253 Premium on Bonds Payable
EQUITY- 311 Common Stock, 312 Paid-In Capital in Excess of Par-Common Stock, 315 Treasury Stock,321 Preferred Stock, 322 Paid-In Capital in Excess of Par-Preferred Stock, 331 Paid-In Capital from Sale of Treasury Stock, 340 Retained Earnings, 351 Cash Dividends, 352 Stock Dividends,390 Income Summary
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